KUALA LUMPUR (March 10): Malaysia Airlines Bhd has announced it will impose a fuel surcharge on passengers and air cargo in selected markets from March 23 after global fuel prices escalated.
“Following the escalating global fuel price, Malaysia Airlines will be imposing a fuel surcharge for passengers and air cargo in selected markets beginning March 23.
“The airline is pro-actively managing its capacity to mitigate unprofitable routes due to rising fuel costs,” said a Malaysia Airlines’ spokesperson when contacted by The Edge.
Oil prices rose in volatile trading on Thursday (March 10) after a sharp drop in the previous session, as the market pondered whether major producers would increase supply to fill the output gap caused by Russia's sanctions for its invasion of Ukraine, Reuters reported.
Brent crude futures were up US$2.53 (RM10.59), or 2.28%, at US$113.67 a barrel by 0651 GMT, after trading in a range of about US$5. The benchmark contract had plunged 13% in the previous session, its biggest one-day drop in nearly two years, said the news agency.
Meanwhile, the US West Texas Intermediate (WTI) crude futures rose US$1.64, or 1.51%, to US$110.34 a barrel after trading in a US$4 range. The contract had fallen 12.5% in the previous session, its biggest one-day drop since November.
TA Securities Research said in its March 2 report that it is maintaining its oil price assumption of US$88 to US$92 per barrel.
“In the short term, we believe the following drivers will sustain oil price strength: worries of oil supply disruptions emanating from Russia’s invasion of Ukraine, receding concerns that the Covid-19 Omicron variant will impact oil consumption, shrinking inventories, demand for oil as an alternative due to gas shortage in Europe, and OPEC+’s inability to increase production to fulfil set quotas,” it said.
On the other hand, there are factors that could limit the upward trend in oil prices. These are the possible return of 1.3 million barrels per day of Iranian crude oil supplies after the lifting of sanctions, inflationary pressures that could derail the economic recovery and collapse of oil demand, and the rapid release of US Strategic Petroleum Reserves (SPR) to cool off prices in the wake of the Russia-Ukraine war.
“Nevertheless, over the medium term, we expect oil prices to soften in the second half of 2022. This is underpinned by expectations of increased oil production from OPEC+ and the US that will lead to inventory build-ups,” TA Securities added.