U.S. airline shares moved sharply higher in premarket trading on Wednesday as oil prices dropped following a conditional ceasefire agreement between the United States and Iran, easing tensions that had unsettled energy markets for more than five weeks.
Delta Air Lines (NYSE:DAL), United Airlines (NASDAQ:UAL) and American Airlines (NASDAQ:AAL) gained between 6% and 8% before the opening bell as of 05:42 ET, while crude oil prices fell to their lowest level since March 25. Brent crude was down 14.1% at $93.83 at the time of writing.
Fuel costs, particularly jet fuel, represent one of the largest operating expenses for airlines and tend to move in line with crude prices, meaning the sharp drop in oil is seen as a meaningful boost for the sector’s profitability outlook.
The slide in oil prices followed comments from President Donald Trump late Tuesday that he had agreed to pause planned military strikes on Iranian infrastructure for two weeks, provided Iran allows the immediate reopening of the Strait of Hormuz.
“This will be a double sided CEASEFIRE!” Trump wrote on Truth Social. “The reason for doing so is that we have already met and exceeded all Military objectives, and are very far along with a definitive Agreement concerning Longterm PEACE with Iran, and PEACE in the Middle East.”
Iranian Foreign Minister Abbas Araghchi also said, speaking on behalf of the country’s Supreme National Security Council, that Tehran’s military would “cease their defensive operations.”
Trump, who had issued several warnings in recent weeks before stepping back from escalation, said progress in negotiations had led him to support the ceasefire arrangement. Iran had put forward a 10-point proposal that he described as a “workable basis” for negotiations, and he indicated that a final agreement could be reached within the two-week timeframe.
Financial markets reacted positively to the development, with global equities advancing after news of the ceasefire emerged.