Airlines and related stocks such as engine maker Rolls-Royce Holdings PLC (LSE:RR.) were lifted higher in early trading on Wednesday as oil prices fell after comments from the US and Iran raised hopes of an end to the war in the Middle East.
Brent crude oil dropped 4% to below $100 a barrel, from $107 yesterday afternoon and above $116 on Monday.
This sent shares in Rolls-Royce jumping 8.2%, while British Airways parent International Consolidated Airlines Group SA (LSE:IAG) flew 5.8% higher. On the FTSE 250, easyJet PLC (LSE:EZJ) was up 5.6% and Wizz Air Holdings PLC (AIM:WIZZ), with more exposure to the Middle East, leapt 8.1%.
Financial markets rallied in the US overnight after Iran’s state news agency reported President Pezeshkian saying that the country is willing to end the war if there are guarantees “to prevent the recurrence of aggression”.
President Trump said last night that he foresees ending the war "within two weeks, maybe three" but suggested that "we’re not going to have anything to do with" what happens in the Strait of Hormuz, the key shipping lane for oil and liquid natural gas supplies to the rest of the world.
Earlier in the week, reports detailed how thousands of flights have been cancelled around the world due to the Iran war, causing jet fuel prices to more than double since a year ago.
The UK bagged its last-known shipment of jet fuel from the Middle East earlier this week, according to the Financial Times, with analysts warning of a potential jet fuel shortage.
Deutsche Bank analyst Jaime Rowbotham, in a note to clients, that jet fuel had remained "persistently high" at $1,700 per metric tonne and "fuel supply shortages are becoming an increasing concern".
He said tracker data shows a "notable sequential improvement in the last-minute fares of all carriers and in all segments", especially economy flights from the EU to the rest of the world, with IAG’s "looking the strongest" in March.