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Unrest in the Middle East is likely to have serious consequences, and not only for those attempting to oust their governments. The first effect, of course, will be on fuel costs, with prices expected to continue to rise, despite Tuesday’s 6 cent jump in the spot price of Gulf Coast jet fuel. With jet fuel already at some $120.12 per barrel, or $2.86 per gallon, more than 5% higher than a month ago, IATA is forecasting an additional $39 billion bill for airlines this year, above what they paid in 2010. And that could be a very modest forecast.
With confusion reigning over Libyan oil exports, (some 67% of which feed southern Europe), supply looks threatened. Libya’s crude oil output has been steady at 1.56m barrels a day, according to Opec, accounting for 2.3% of the organisation’s total production. Opec has indicted that it might increase production, possibly from Saudi Arabia.
The International Energy Agency has warned that the rising price is likely to affect the global economy and could hinder its recovery, and that it might use its own 1.6bn barrel emergency reserve.
And of course it’s not just oil prices – and the wider economic implications –  that will hit the terminally sensitive air industry. Import cargo to Libya  – both air and sea – has also been suspended, according to Agility, with Benghazi, Tripoli and Misurata ports said to be closed. Sea freight is being diverted to Alexandria, Gioia Tauro and Algeciras. The airport in Benghazi is reportedly “unserviceable” and while Tobruk airport in the north east is in the area which has apparently been liberated, air traffic control remains in the hands of the government. Some air freight could enter Egypt, but with Egyptian services suspended for more than a week in early February, delays and congestion are expected as it clears the backlog.
Scheduled passenger flights have been cancelled by the major airlines including British Airways, KLM, Emirates and BMI, although the charter industry is currently doing good business on behalf of panicking governments and oil companies. But tourism is also likely to be hit in the longer term to Egypt, Tunisia and Morocco, and there are reports of significant demand issues for Tunis Air and Egypt Air. Just another challenging day for the airline industry, then.

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