Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings all reported strong performance in the most recent quarter, despite the ongoing rise in fuel prices. How the leading cruise companies in the industry respond to fuel costs ultimately depends on their distinctly different strategies.

Since the United States and Iran went to war on February 28, oil prices have soared. Last Friday, Brent crude oil reached a six-month high, closing at $116.72 per barrel. With no clear sign of an end to the conflict in the Middle East, this pressure on the "lifeline" of the cruise industry seems to continue throughout the holiday travel season and beyond.

Both Royal Caribbean and Norwegian Cruise Line adopt a "hedge" strategy, which involves using derivatives to reduce the risk associated with future fluctuations in fuel prices, in order to cope with drastic changes in oil prices.

In contrast, Carnival's CEO Josh Weinstein stated in an interview with CNBC last month that reducing fuel consumption is the best way to avoid the impact of high oil prices.

Weinstein said at that time, "In the end, fuel is our input cost. The best thing we can do to control this cost is to use less of it."

Analyst David Katz stated in an interview with CNBC that companies engage in hedging mainly to manage fuel costs, as well as to manage Wall Street's expectations and to avoid sharp fluctuations in stock prices due to changes in fuel prices.

Katz said, "When you are a publicly traded company, the market trades your stock around fuel prices." He added, "The market's view is that volatility will put pressure on your valuation multiples."

"Although mathematically, this is likely to be more expensive in the long run," he explained, "reducing fuel fluctuations and transaction fluctuations in the model is beneficial for the valuation multiple."

Despite the potential benefits of this strategy, Carnival has maintained the same stance since 2019: reducing fuel consumption is more effective than hedging.

Carnival's financial report for the third quarter, released last month, indicates that this strategy may be starting to show results.

Carnival's "crazy" cuts

Carnival's latest quarter revenue and earnings per share exceeded analysts' expectations, with a record net profit of $1.9 billion.

After the release of the financial report, Weinstein stated in an interview on the CNBC program " Squawk on the Street " that the company has been "almost crazy" in reducing fuel consumption, and mentioned that since 2019, the fuel consumption per unit has decreased by 26%.

He said, "We estimate that, based solely on the decline in consumption savings rates since 2019, we will be able to save approximately $700 million by 2026."

According to Carnival's latest financial report, the company's fuel expenses in the third quarter amounted to $615 million, accounting for approximately 7.3% of its revenue. This is higher than the $425 million in the fourth quarter of 2025, which was 6.7% of revenue at that time, when fuel prices had not yet soared.

Carnival expects fuel costs to rise to $640 million in the fourth quarter, according to its financial report.

Cautious hedging

Royal Caribbean also exceeded analysts' expectations in earnings per share for the third quarter, as the company released its financial report on Tuesday. However, its revenue was slightly below expectations.

In an interview with CNBC on Tuesday morning, Chief Executive Officer Jason Liberty stated that part of the reason for the company's performance exceeding expectations was due to its hedging strategy.

He said, "By 2026, we will have hedged more than 60% of our fuel costs, so this will help us withstand the impact of some increases in fuel prices."

Liberty said, 'This is clearly still affecting us. [High oil prices] have offset a significant portion of the positive impact on our third-quarter performance, which exceeded expectations, into the annual guidance. However, we will continue to hedge and keep a close watch.'

According to the financial report, Royal Caribbean's fuel expenses in the third quarter were approximately $347 million, accounting for about 6.2% of revenue. In contrast, the company's fuel expenses for the fourth quarter of 2025, as of December 31, were $293 million, accounting for 6.8% of revenue.

The company expects fuel costs to continue to rise to $379 million in the fourth quarter.

Liberty points out that high oil prices have not weakened consumers' demand for vacations.

He said, "It's not that we haven't seen some challenges, but what we've truly observed is that even in the face of these challenges, consumers are still making a strong comeback."

Royal Caribbean announced strong reservation performance in the third quarter, stating that reservations for 2027 have increased by a single-digit percentage compared to the same period last year.

Norwegian cruise lines continue to bet big

Norwegian Cruise Line Holdings announced its third-quarter results on Thursday, with revenue of $2.9 billion and an adjusted earnings per share of $1.12, both exceeding expectations.

According to the financial report, the company has hedged approximately 48% of its fuel consumption for 2026.

Norwegian cruise lines spent approximately $196 million on fuel in the third quarter, which accounts for about 6.6% of their revenue. This is lower than the $167 million spent in the fourth quarter of 2025, which accounted for 7.4% of revenue.

The company expects fuel consumption in the fourth quarter to rise slightly to 255,000 metric tons, higher than the 239,000 metric tons consumed in the third quarter.

The company is making efforts to turn losses into profits. Despite the additional challenges posed by the macro environment, Chief Financial Officer Mark Kempa stated during the earnings call on Thursday that the results for this quarter reassured him.

Kempa said, "These results have strengthened our confidence in the product's attractiveness, as well as our belief in the opportunity to transform stronger revenue performance and strict cost management into improved profitability."