Mideast carriers to benefit from lower oil price

An Emirates flight attendant pictured onboard an Airbus A380. Regional carriers have emerged from a tough year. (Shutterstock)
Updated 12 December 2018
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Mideast carriers to benefit from lower oil price

  • IATA expects Mideast airlines to make profits of $800m in 2019
  • Capacity growth expected to slow next year

LONDON: Lower oil prices are expected to boost profits at Middle East airlines in 2019 as a decade of double-digit growth starts to slow.
The 2019 industry outlook from the International Air Transport Association (IATA) is based on an anticipated average oil price of $65 per barrel — lower than the $73 experienced in 2018.
Middle East airlines are expected to report an $800 million net profit in 2019, compared to $600 million in 2018, IATA said on Wednesday.
“We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer,” said IATA CEO Alexandre de Juniac. “So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year.”
Lower oil prices are welcome relief for airlines whose aviation fuel bill can account for a third of overall costs.
IATA said jet fuel prices are expected to average $81.30 per barrel in 2019, lower than the $87.60 per barrel average for 2018.
Middle East carriers have been hurt by a slowdown in regional spending, conflict and overcapacity.
That is expected to lead to a slowdown in capacity growth — projected at 4.1 percent in 2019 compared to 4.7 percent in 2018.


Oil prices jump as US crude stocks fall, Middle East worries add support

Updated 26 June 2019
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Oil prices jump as US crude stocks fall, Middle East worries add support

  • Analysts said the gains were mainly driven by American Petroleum Institute data showing a fall in US crude inventories
  • Data come as traders watched for any signs that tensions between the US and Iran could escalate into military conflict
SYDNEY: Oil prices rose more than 1 percent on Wednesday to their highest in nearly a month as industry data showed US crude stockpiles fell more than expected, underpinning a market already buoyed by worries over a potential US-Iran conflict.
Front-month Brent crude futures, international benchmark for oil, were up 1.3 percent at $65.91 by 0341 GMT. They earlier touched their highest since May 31 at $66 a barrel.
US West Texas Intermediate (WTI) crude futures were at $58.98 per barrel, up 1.8 percent from their last settlement. WTI earlier hit its strongest level since May 30 at $59.03 a barrel.
Analysts said the gains were mainly driven by American Petroleum Institute (API) data showing a fall in US crude inventories.
US crude stockpiles fell by 7.5 million barrels in the week ended June 21 to 474.5 million, compared with analyst expectations for a decline of 2.5 million barrels, the data showed. Crude stocks at US delivery hub Cushing, Oklahoma, fell by 1.3 million barrels.
“Oil prices went ballistic after the API report,” said Stephen Innes, a managing partner at Vanguard Markets.
“Oil prices have been squeezing higher on escalating tensions in the Middle East. But with late-day draws showing up in the API report, this is a strong signal for the energy market,” Innes said.
The data came as traders watched for any signs that tensions between the United States and Iran could escalate into military conflict.
US President Donald Trump threatened on Tuesday to obliterate parts of Iran if it attacked “anything American,” in a new war of words with Iran. Tehran has condemned a fresh round of US sanctions as “mentally retarded.”
Bilateral tensions between the two have spiked anew after Iran shot down a US drone last week in the Gulf. Relations have been tense since Washington blamed attacks on oil tankers just outside the Gulf in May and June on Iran, while Tehran has repeatedly said it had no role in the incidents.
Conflict between Washington and Tehran has stoked fears that shipments passing through the Strait of Hormuz — the world’s busiest oil supply route — could be disrupted.
Seeking to calm a nervous market, the head of national oil company Saudi Aramco said on Tuesday the company can meet the oil needs of customers using its spare capacity.