On Tuesday, the Oman crude traded for $100 per barrel and above for the first time since August 2014.
The last time Oman crude touched the $110-mark ($110.96 per barrel) was on August 30, 2013.
The budget for 2022 is based on an oil price per barrel as compared to USD 45/bbl in the tenth five-year plan. The average price of oil for 2021 was $61per barrel. The deficit is estimated to be RO 1.55 billion, which is expected to represent 15 percent of revenues and 5 percent of the GDP in 2022.
According to Dubai Mercantile Exchange, on Tuesday, the Oman crude was traded at $100.85 for May delivery, an increase of $4.98 from Sunday.
The last time the Oman crude traded for above $100 was on August 29, 2014, while the highest price at which the crude traded was $137. 50 on June 30, 2008.
During this period, the crude touched lows of $23. 15 on January 20, 2016, and $16.49 on April 28, 2020.
Global oil prices surged on Tuesday over potential supply disruptions as Ukraine and Russia conflict outweighed talk of a coordinated release of crude stocks to calm markets.
Asian stocks came under renewed pressure on Wednesday and the price of oil surged past $110 per barrel as investors worried about the impact of aggressive sanctions against Russia for invading Ukraine.
But just as countries have started easing Covid-19 related restrictions and protocols, rising crude prices (above $100 a barrel), the airline industry experts are concerned over rising aviation turbine fuel (ATF) prices, which account for a major share of operating expenses.
Fitch Ratings said it does not expect any immediate negative action related to a jump in fuel prices, given good liquidity following the stockpiling of cash during the pandemic and recovering passenger traffic amid waning cases of the Omicron variant.
“However, a sustained period of higher jet fuel prices may prolong airline recoveries, which could pressure some ratings or delay positive rating actions.”
Airline cost structures are already under pressure, as carriers are still recovering from pandemic lows and are not yet flying at full capacity. In addition to soaring jet fuel prices, airlines are also experiencing upward pressure on wages and airport costs, while catching up on maintenance items deferred during the pandemic.
The International Air Transport Association (IATA) said it expects overall traveler numbers to reach 4 billion in 2024 (counting multi-sector connecting trips as one passenger), exceeding pre-COVID-19 levels (103 percent of the 2019 total).
“The trajectory for the recovery in passenger numbers from COVID-19 was not changed by the Omicron variant. People want to travel. And when travel restrictions are lifted, they return to the skies. There is still a long way to go to reach a normal situation, but the forecast for the evolution in passenger numbers gives good reason to be optimistic,” said Willie Walsh, IATA’s Director-General.