IATA says Mideast oil price surge a 'big challenge'
TOKYO - Surging oil prices due to political turmoil in the Middle East spell "very, very big challenges" for airlines, International Air Transport Association chief Giovanni Bisignani said on Wednesday.
The political unrest that has swept the key oil-producing Middle East and North African region, including Libya, Bahrain, Yemen and Iran, has stoked fears of disruption to global crude supplies and led to price spikes.
The troubles have kept oil at two-year highs, with Brent North Sea crude for delivery in April up 22 cents at $106 a barrel. New York's main contract, light sweet crude for April, rose four cents to $95.46.
"Oil is a big problem because it could change completely the picture" for the sector, said the chief of IATA, which represents some 230 airlines comprising 93% of scheduled international air traffic.
Bisignani said high energy prices could turn what had been "forecast to be a profitable year into a very complicated year".
Airlines are facing "very very big challenges" due to the high oil prices, he told a press conference in Tokyo.
IATA recently predicted passenger traffic would grow for the second consecutive year after its crisis-driven drop in 2008, but it said net profits for airlines as a whole would fall 40 percent to $9.1 billion in 2011.
The forecast was based on an oil price of $84 per barrel for Brent crude.
Libya was gripped by turmoil as leader Moamer Kadhafi on Tuesday ordered his supporters to crush an uprising and warned he would fight to the death to remain in charge of the country he has ruled since 1969.
"This is my country, my country," he raged on national television. "I will fight to the last drop of my blood."
The violence across the country -- inspired by the toppling of the leaders of Tunisia and Egypt -- has seen scores of people killed at the hands of Kadhafi's henchmen, which has met with international outrage.
Uprisings have broken out across the region, including in Morocco, Yemen, Bahrain and Iran.
However, further crude oil price rises could be capped after Saudi Oil Minister Ali al-Naimi said the OPEC oil cartel would step in to meet any supply shortage caused by the turmoil.