Airline stocks rallied on Friday after oil prices eased following Iran’s announcement that the Strait of Hormuz would remain open.
Earlier this week, Iran’s foreign minister said the Strait of Hormuz is “completely open” to commercial vessels, signalling a de-escalation in tensions that had previously raised fears of disruptions to global oil flows through the strategic waterway.
On Friday, United Airlines Holdings Inc (NASDAQ:UAL, XETRA:UAL1) rose 11.1%, American Airlines Group Inc (NASDAQ:AAL, XETRA:A1G) gained 9%, Delta Air Lines Inc (NYSE:DAL) added 7.1%, Alaska Air Group (NYSE:ALK) surged 14%, and Southwest Airlines Co (NYSE:LUV) climbed more than 10% as lower fuel cost expectations and improved risk sentiment lifted the sector.
The move follows a ceasefire agreement between Israel and Lebanon, which has helped ease geopolitical risk premiums across energy markets.
Analysts said the reopening of the Strait reduced the likelihood of sustained supply shocks, though they cautioned that risks remain.
“There are risks that could see the Strait close once more, but we think now that Iran has reopened the Strait then the chance of them closing it again is minimal, as they also need their oil to flow through the Strait to boost revenues,” said Kathleen Brooks, research director at XTB.
Brooks added that easing geopolitical tensions were supporting broader market sentiment into the end of the week.
“The good news continues to build, which is providing a sense of upward momentum for risky assets as we end the week. For stock and bond market bulls around the world, this is the perfect end to the week.”
The decline in oil prices added further relief for airline operators, which are highly sensitive to fuel costs, contributing to the sharp gains across the sector.