SINGAPORE: With continued high oil prices, the big question for analysts and investors alike is just how much they have hit the corporate bottomline.

And as we enter into the second quarter earnings reporting season, the spotlight will be on firms in the transport sector which are dependent on fuel.

According to one estimate, they could see a drop of as much as 20 per cent in second quarter earnings compared to a year ago.

The concern about oil prices is not only how high they are, but also how fast they accelerate.

Kit Wei Zheng, Asia Pacific Economic and Market Analyst, Citicorp Investment Bank, said: "If oil prices were to reach US$150 a barrel, this would incur a much faster speed of increase, compared to the previous four years.

"What this would mean is that businesses and consumers will have far less time to adjust than was previously the case.

"And lastly, I think there will be some second round on growth if regional central banks were forced to tighten monetary policy in response to oil induced inflationary increases."

Some 25 airlines worldwide have already gone under so far in the first six months of this year due to rising fuel costs.

The International Air Transport Association estimates that for every dollar added onto the price of oil, costs for the aviation industry will go up by US$1.6 billion.

And rough skies loom ahead, with some predicting that oil prices may one day hit US$200 a barrel.

David Bensimon, Managing Director, Polar Pacific, said: "Ultimately, we can reach US$200. The market needs to digest and pull back quite sharply before it can make another attempt at the upside."

In the short term, however, after recent spikes, some industry players said oil prices may dip to as low as US$123 a barrel. And this could come as a short-term reprieve for businesses in the transport sector. - CNA/vm