Airlines gain as Trump postpones Iran strikes, easing oil pressure
United Airlines down 4.5% on fuel concerns faces relief as energy costs stabilize amid de-escalation
Airline stocks found support in morning trading on Monday as President Trump's decision to postpone further military strikes on Iranian energy infrastructure eased fears of a major oil supply disruption. The de-escalation removes an immediate threat to the Strait of Hormuz, through which approximately one-fifth of global petroleum shipments typically transit.
West Texas Intermediate crude retreated to $99.22 per barrel, easing from intraday highs that approached $100. The price movement came after Trump told reporters that the military would postpone additional strikes on Iranian energy infrastructure. The Strait of Hormuz, a critical global chokepoint for oil shipments, had been largely blocked to commercial shipping in recent days, according to market reports.
For airlines, the stabilization in oil prices provides welcome relief after a month of intense volatility. Fuel represents roughly 30% of operating expenses for carriers, making energy costs a primary driver of profitability. The U.S. Global Jets ETF has dropped more than 18% over the past month as Brent crude surged above $115 per barrel amid escalating tensions.
United Airlines (UAL), which had been among the hardest hit carriers, fell 4.5% in early trading before paring losses. The company recently announced a 5% reduction in scheduled capacity for the second and third quarters of 2026 to counter rising fuel costs. The Chicago-based carrier joins several U.S. airlines in tactically pruning unprofitable routes as they navigate what analysts have called a "cliff-edge" environment for 2026 earnings.
Despite the recent pressure, analysts remain largely positive on the sector. TD Cowen upgraded United Airlines from "hold" to "strong-buy" in recent days, while the stock maintains a consensus target price of $135.06—roughly 50% above current levels. Of 26 analysts covering United, 19 rate it a "buy" and five maintain "strong-buy" recommendations, with zero "sell" ratings.
Citi lowered its price target on United to $132 from $155 last week, citing fuel cost pressures, but maintained a buy rating. The carrier's current valuation of 8.8 times trailing earnings represents a discount to historical averages, suggesting some downside protection may already be priced in.
The International Energy Agency has warned that the Hormuz crisis poses a "major threat" to the global economy, with more than 12 million barrels of oil equivalent in Middle Eastern production currently offline. For airlines, any sustained reduction in geopolitical risk would provide significant operating leverage, as fuel hedging programs typically cover only a portion of consumption.
United Airlines shares closed at $89.95 on Friday, down 4.5% from the previous session. The stock remains down 25% from its 52-week high of $119.21, reached earlier this year before Iran tensions escalated.