Alcohol for the stove is called "Raudsprit" in Iceland, it can be bought from many gas stations. I'm spending a day in Reykjavik to buy supplies and there are some camping stores and a big home improvement superstore near the harbour where I can buy fuel for the Trangia. 8 oz will last me a week if I cook 2 meals a day, so as I'll be using the kitchens in the hostels and staying in hotels for 4 nights, 8oz should last the entire trip.