Iran's Attack on Tanker Causes Oil Price to Breakthrough $100, Aviation Stocks Under Pressure and Decline

Investing.com - During Thursday’s pre-market trading, U.S. airline stocks generally declined after Iran attacked two oil tankers in the northern Persian Gulf, causing oil prices to spike above $100 per barrel. This could increase quarterly fuel costs for the three major airlines by nearly $5 billion.

Southwest Airlines (NYSE:LUV) led the decline, dropping 2.7% to $40.73. The company ended its fuel hedging program in 2025, leaving it fully exposed to spot market pricing risks. Delta Air Lines (NYSE:DAL) fell 2% to $57.97, and United Airlines (NASDAQ:UAL) declined 2.2% to $88.73. American Airlines dropped 2% to $10.82. European airline stocks suffered more severe losses, falling between 2.4% and 5.8% on Thursday morning, with Lufthansa Group, Air France-KLM, easyJet, IAG, Wizz Air, Norwegian Air, and Ryanair all declining.

Jet fuel prices have risen 15% over the past week, increasing by as much as $1.75 per gallon. Industry estimates suggest this could add $1.5 billion or more to quarterly fuel costs for each major U.S. airline. “For the big three airlines, this could translate into nearly $5 billion in additional expenses. Even if oil prices stabilize quickly, ticket prices may rise in the coming months,” warned Patrick De Haan, head of petroleum analysis at GasBuddy.

On Thursday, Brent crude futures rose $8.54, or 9.28%, to $100.52 per barrel, while U.S. WTI crude climbed $7.22, or 8.28%, to $94.47, before pulling back slightly. According to Energy News Beat, the tanker attacks occurred within Iraqi waters near the al-Faw port south of Al Basrah and the Umm Qasr anchorage. An estimated 25 crew members on the two ships were safely evacuated, with no reports of injuries.

Key Thresholds for Airline Investors

Analysts warn that if U.S. WTI crude prices remain above $95 per barrel, major airlines may see their Q2 earnings forecasts cut by 5-10%. Operators like Southwest that do not hedge fuel costs could face the most significant corrections. Fuel typically accounts for 20-30% of airline operating expenses, making the sector particularly vulnerable to oil price shocks. Over the past two decades, most major U.S. airlines abandoned their fuel hedging programs after suffering losses during price declines.

United Airlines has already indicated that rising fuel costs will impact quarterly performance. As management assesses how long high prices will persist, other airlines may issue revised guidance in the coming days. Morgan Stanley analysts noted that “crack spreads (the price difference between crude/diesel and jet fuel) have recently widened sharply,” suggesting that jet fuel costs could rise faster than crude oil prices themselves—raising concerns about profit margin forecasts.

Operational disruptions have added financial pressure beyond fuel costs. The conflict has led to over 20,000 flight cancellations and thousands of stranded passengers, causing revenue losses and flight chaos, further squeezing profit margins. Several Asian airlines, including Hong Kong Airlines, announced Thursday that they would raise fuel surcharges to 35.2%, indicating that cost increases are passing through to consumer prices.

Regional Tensions Threaten Supply

The situation has escalated beyond Iraqi waters, affecting key export infrastructure across the Gulf region. Following a series of attacks, Oman has evacuated all ships from its critical oil export terminal, Mina Al Fahal, as a precaution, though the operational status of the facility remains unclear. The terminal exports about 1 million barrels of Omani crude daily, with Thursday’s crude price around $132 per barrel—well above the Brent benchmark.

The Iraq State Oil Marketing Organization (SOMO) halted all oil terminal operations after the attacks, citing threats to “the safety of maritime navigation and oil activities within Iraqi waters.” On Wednesday, Iran’s drones attacked oil storage facilities at Oman’s Salalah port, hitting fuel tanks but causing no damage to commercial ships.

Iran’s Revolutionary Guard warned that any ships passing through the narrow Strait of Hormuz would become targets. Since the conflict began, at least 16 ships have been attacked in the region. “There are no signs of de-escalation in the Gulf region, so the disruption of oil flows through the Strait of Hormuz appears endless,” said ING analysts Thursday.

A spokesperson for Iran’s military command warned Wednesday: “Prepare for $200 per barrel oil, as prices depend on regional security, which you have already compromised.” This statement targeting the U.S. underscores Tehran’s strategy of using energy security as leverage, with the broader conflict dating back to the U.S. and Israel’s strikes on Iran on February 28, 2026.

Key Points to Watch

The International Energy Agency announced plans to release 400 million barrels from reserves—its largest such action in history—with the U.S. starting to release 172 million barrels from March 16. However, Reuters reports that Asian stock markets declined broadly on Thursday, with investors “hardly comforted” by the announcement, indicating skepticism that even a historic supply injection can offset Gulf region disruptions.

Investors should monitor whether U.S. WTI crude prices stay above $95 during next week’s Strategic Petroleum Reserve releases, as sustained prices at this level could lead analysts to downgrade the entire airline sector. Management comments during upcoming earnings calls will be crucial in assessing how airlines plan to absorb or pass on higher fuel costs. If crude remains high into Q2, the lack of hedging by Southwest makes it particularly vulnerable to profit margin compression.

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