European airline stocks moved significantly higher on Friday after a steep decline in crude oil prices that followed comments from U.S. President Donald Trump about a proposed agreement with Iran. The remarks, which described a memorandum of understanding that would reopen the Strait of Hormuz and include Iranian commitments to forgo nuclear weapons development, coincided with a notable fall in benchmark oil prices.
As of 04:28 ET (08:28 GMT), Brent crude was down 4.4% at $86.39, while WTI fell 4.5% to $83.77, levels described as the lowest for both benchmarks in nearly two months. The slide in fuel costs provided an immediate reprieve for European carriers, which are sensitive to jet fuel prices as a major component of operating expenses.
The move in energy markets translated into gains across the airline sector, with share-price advances ranging from 4.1% to 8.5% for the group. Air France-KLM recorded the largest increase, while EasyJet lagged behind its peers. Other carriers that traded higher included Ryanair, Lufthansa, Wizz Air, Finnair, IAG, and Norwegian Air Shuttle.
President Trump said on Thursday the proposed deal would reopen Hormuz shipping without tolls, extend the existing ceasefire by 60 days including in Lebanon, and provide Iran with sanctions relief tied to its compliance, with the U.S. lifting its naval blockade in return, according to Axios, which cited a U.S. official and a diplomat from one of the mediating countries. Trump also said Vice President JD Vance would attend a potential signing in Europe as soon as this weekend.
"We made a great deal. There’ll be no nuclear weapons. People will start coming home very soon. It’s pretty much, pretty much completed. We got everything we wanted," Trump said during a tele-rally for Alabama Senate candidate Barry Moore.
Iran’s response to the proposed framework was cautious. The semi-official Fars news agency reported that officials had not yet approved the text of any agreement, citing an unnamed source close to the negotiating team. Iran was also absent from the list of countries President Trump said had agreed to a deal framework.
Market participants interpreted the statements and the reporting as a potential reduction in geopolitical risk affecting crude and shipping routes, a development that directly affects airline input costs. The extent of the relief in fuel costs, however, remains linked to whether the proposed measures are finalized and implemented as described.
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