Spikes in the price of jet fuel following attacks on Saudi Arabian facilities earlier this month were not as bad as feared as crude oil was trading only fractionally higher by the end of last week.
According to the weekly IATA-Platts Jet Fuel Price Index, the cost per gallon of aircraft fuel was on Friday up 8.5% compared with a week earlier, while prices were 9.3% lower than a year ago.
A Platts Insight report said that "instead of an oil shock spiraling out of control after prices initially surged by a record 20%, crude was trading on Friday only fractionally higher than its $64/b year-to-date moving average".
The report said that the relative price stability was down to Saudi Aramco pledging to restore its capacity to 11m barrels per day by the end of the month, after losing half its capacity in the attacks, and the growth in US shale production.
Last week there had been fears of a spike in the cost of air cargo as a result of the attacks.
Freight derivatives broker Freight Investor Services had previously warned: “Given the violence of this increase – with Brent Crude Oil (a key benchmark for jet fuel hedging) climbing as much as 20% in a few minutes on Monday – the pass-over into linked markets (air, container freight) is somewhat inevitable."
