Airline Stocks Climb As Oil Prices Drop: What’s Going On?

Several airline stocks traded higher on Monday amid a drop in oil prices. Here’s a look at some of the biggest movers.

• American Airlines Group Inc AAL

• United Airlines Holdings Inc UAL

• Delta Air Lines Inc DAL

• Southwest Airlines Co LUV

• Spirit Airlines Inc SAVE

• Alaska Air Group, Inc. ALK

• JetBlue Airways Corporation JBLU

• Frontier Group Holdings ULCC,

The Details: Crude oil prices saw their sharpest one-day drop since 2022 on Monday. Oil futures for West Texas Intermediate (WTI) fell by 6%, settling near $67 per barrel. This drop followed Israeli airstrikes in Iran that focused on military targets and avoided oil infrastructure, reducing fears of immediate supply disruptions.

Oil markets had initially reacted to Middle East tensions earlier in the month, with concerns that strikes on Iranian oil facilities could disrupt supply. However, the limited scope of these recent airstrikes led analysts to expect oil prices to remain under pressure.

Analysts noted that if OPEC+ proceeds with plans to increase supply while demand, particularly from China, continues to decrease, prices could trend lower into 2025.

China’s oil demand has slowed since May, with structural changes in its energy sector and a higher share of new electric vehicle registrations contributing to reduced oil consumption.

Lower oil prices are generally bullish for airlines given that oil is one of the biggest expenses for airline companies. All of the aforementioned stocks gained between 1% and 4% on Monday, according to Benzinga Pro.

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