The International Air Transport Association (IATA) has said that the recent Saudi Arabia oil attack would reduce supply but the gap could be partly compensated from storage facilities, although oil prices are expected to remain under pressure and may affect airline profits.
In a statement, the airline association said it will also likely take some time for production to return to normal and impact airlines profits.
The attack on Saudi Arabia would, however, not cause a recession.
"The impact of the rise in oil prices on airlines will depend on hedging ratios, but each US$5 per barrel increase in the price of jet fuel could reduce overall industry net profit margins by around 0.5% points," IATA said.
Oil prices were stable in August 2019 but jumped up in September 2019 following the attack at the oil processing facilities at Abqaiq and Khurais in Saudi, initially reported having been attacked by a swarm of armed drones.
IATA said Brent crude oil was US$68 per barrel and jet fuel reached US$85 per barrel, 11% higher compared to the end of August 2019.
The airline association noted that the scale of disruption to oil supplies due to the closure of the Saudi Aramco facilities at the Abqaiq oil field was "the largest ever," with the attack halting the supply of 5.7 million barrels of crude oil a day, representing some 5% of world oil supply.
IATA said, however, that the resulting increase in oil price is "not likely to trigger recession this time."
"The association stated the reaction of oil prices to the loss of 5% of world oil supply has been 'remarkably muted', with prices up only US$5 per barrel than prior to the attack, and prices are still lower than they were at this time in 2018," it said.
