U.S. airline stocks moved lower in early trading after oil prices spiked following reported attacks on two oil tankers in the northern Persian Gulf. The move in crude compounded pressure on carriers already facing a rapid climb in jet fuel costs, with industry estimates suggesting the increase could add nearly $5 billion in quarterly fuel expense across the three largest U.S. carriers.
Market reaction and individual carriers
Southwest Airlines (NYSE:LUV) led losses among U.S. carriers, sliding 2.7% to $40.73 after the market opened, a drop underscored by the carrier's decision to end its fuel hedging program in 2025 and thereby become fully exposed to spot prices. Delta Air Lines Inc (NYSE:DAL) fell 2% to $57.97, United Airlines (NASDAQ:UAL) declined 0.2.2% to $88.73, and American Airlines Group (BMV:AAL) eased 2% to $10.82.
European carriers experienced even larger declines Thursday morning, with shares down between 2.4% and 5.8% across airlines including Lufthansa, Air France-KLM, easyJet, IAG, Wizz Air, Norwegian Air, and Ryanair.
How much more will fuel cost?
Jet fuel prices have surged roughly 15% over the past week, rising by as much as $1.75 per gallon, a move that the industry estimates could translate to at least $1.5 billion in additional quarterly fuel costs for each major U.S. airline. "Across the three largest airlines, that could translate to nearly $5 billion in additional expenses. Airfares are likely to rise in the months ahead, even if oil prices begin stabilizing soon," said Patrick De Haan, GasBuddy's head of petroleum analysis.
Brent crude futures jumped $8.54, or 9.28%, to $100.52 a barrel on Thursday, while U.S. West Texas Intermediate crude gained $7.22, or 8.28%, to $94.47 before easing somewhat later in the session.
Details of the attacks and immediate safety outcomes
The tanker strikes were reported roughly 5 nautical miles south of Al Basrah, near al-Faw port and the Umm Qasr anchorage area, within Iraqi territorial waters. All crew members on the two vessels - estimated at about 25 people in total - were evacuated safely and there were no casualties reported.
Analyst thresholds and sector vulnerability
Analysts have flagged a specific pricing threshold for investor concern: sustained WTI levels above $95 per barrel. If crude remains at or above that level, some analysts expect second-quarter earnings estimates for major carriers could be reduced by 5-10%, with operators lacking hedges - notably Southwest - likely to face the biggest revisions. Fuel accounts for 20-30% of airlines' operating costs and is typically the second-largest expense after labor, leaving the sector particularly sensitive to abrupt oil price moves. Many U.S. carriers scaled back or exited hedging programs over the past two decades after experiencing losses when prices declined.
United Airlines has already signaled that the recent spike in fuel costs will affect its quarterly results. Other carriers may follow with guidance changes as management teams quantify how long elevated fuel prices could persist.
Analysts at Morgan Stanley pointed to a widening of the crack spread - the price gap between crude or gasoil and jet fuel - noting that "the crack spread (the price gap between crude oil/gasoil and jet fuel) has recently widened sharply," which would imply jet fuel costs could accelerate even faster than crude itself and further compress airline margins.
Operational fallout increases pressure
The strike activity has added operational headaches to the financial hit. The escalating conflict has been linked to the cancellation of more than 20,000 flights, leaving thousands of passengers stranded and creating lost revenue and schedule disruption that amplify the margin pressure created by rising fuel costs. Several Asian carriers, including Hong Kong Airlines, announced fuel surcharge increases of up to 35.2% starting Thursday, indicating that some of the increased costs are already being passed through to consumers.
Regional escalation and supply risks
The disruptions extend beyond the immediate attack sites to wider export infrastructure across the Gulf. Oman evacuated vessels from its major oil export terminal at Mina Al Fahal as a precaution following a series of regional attacks. The terminal typically exports about 1 million barrels per day of Omani crude; that crude was priced at roughly $132 a barrel on Thursday, a level well above the Brent benchmark.
Iraq's State Oil Marketing Organization (SOMO) suspended operations at all of its oil terminals after the attacks, describing them as a threat "to the safety of maritime navigation and oil activities in Iraqi territorial waters." In a separate incident earlier in the week, Iranian drones struck fuel storage facilities at Oman's Port of Salalah, damaging storage tanks though no merchant vessels were reported hit.
Iran's Revolutionary Guards have declared that any ship passing through the narrow Strait of Hormuz could be targeted, and at least 16 ships have reportedly been struck in the area since the conflict began. ING analysts summed up the outlook by saying, "There are no signs of a de-escalation in the Gulf and as a result, there is no end in sight to the disruptions to oil flows through the Strait of Hormuz."
Adding to the rhetoric, a spokesperson for Iran's military command warned: "Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilised." That statement was directed at the U.S. and was framed as part of a strategy to use energy security as leverage in a broader conflict that was said to have begun with U.S.-Israeli strikes on Iran on February 28, 2026.
Supply responses and investor reactions
In response to the market stress, the International Energy Agency announced plans to release 400 million barrels from strategic reserves - the largest coordinated release on record - with the United States set to provide 172 million barrels beginning Monday, March 16. Despite the scale of the planned release, shares across Asian markets fell broadly on Thursday as investors appeared to take little comfort from the announcement, signaling skepticism about whether such injections can fully offset disruptions in the Gulf.
Investors will be watching whether WTI holds above the $95-per-barrel level through the upcoming strategic petroleum reserve release. If prices remain at or above that threshold, analysts say downgrades across the airline sector are likely. Upcoming management commentary on earnings calls will be an important gauge of how carriers intend to cope with the dual pressures of rising fuel expenses and operational disruption, particularly for unhedged carriers like Southwest whose profit margins are most exposed if high crude prices persist into the second quarter.
Investor takeaway
The combination of rising jet fuel costs, a widening crack spread, operational cancellations and regional threats to export infrastructure creates a compound risk to airline profit margins. For investors, the key variables to monitor are the trajectory of crude and jet fuel prices, management guidance from carriers on cost pass-through or hedging measures, and whether the international release of strategic reserves can stabilize markets in the near term.
Note: The report includes company share prices and market moves recorded during early trading on the day of the reported attacks, along with industry and analyst estimates cited in commentary from market analysts and energy organizations.