European airline stocks jump due to falling oil prices and hopes for an Iran deal

Shares of leading European airlines recorded a sharp rise on Monday as oil prices headed downward amid growing optimism surrounding negotiations between the US and Iran. Markets reacted to signs of a potential deal that could ease the conflict, which has been destabilizing global energy supplies for nearly three months.

Lufthansa shares rose by 3.8%, Air France-KLM added 7.4%, EasyJet rose by 5.7%, and Ryanair by 3.2% during morning trading in Europe. The broader Euro Stoxx 50 index also gained more than 1%, as investors actively directed funds toward sectors sensitive to energy prices, including aviation and transportation.

Oil prices fall, markets head upward

The stock market rally followed a 4–5% drop in Brent crude oil prices on Sunday evening and during Monday's trading, when prices fell below $100 per barrel for the first time in several weeks. The decline was supported by a social media post from President Donald Trump, cited by Al Jazeera, in which he stated that negotiations with Tehran are progressing "in an orderly and constructive manner."

An additional signal came from a statement by US Secretary of State Marco Rubio from the previous week, according to which "hopeful signs" of a potential agreement are being observed. These messages were perceived by the markets as an indicator that tensions surrounding energy supplies might begin to subside.

Strait of Hormuz – the "bottleneck" of global energy flows

The Strait of Hormuz, through which about 20% of the world's crude oil and liquefied natural gas supplies pass, remains a critical point for global energy. Since the end of February, it has been largely closed to commercial shipping after Iran blocked it in response to strikes by the US and Israel.

This closure caused a serious shock to European fuel markets. Jet fuel prices doubled, and airlines such as Lufthansa were forced to cancel tens of thousands of flights – both due to more expensive fuel and uncertainty in supply chains.

Airlines hope for a brief "breather"

The aviation sector is among those most heavily affected by the conflict. According to Morningstar data, shares of EasyJet, Air France-KLM, and Wizz Air have lost over 14% of their value since the start of the war on February 27. Lufthansa reported additional fuel costs of about $2 billion in the first quarter alone but maintained its annual profit forecast, thanks to higher ticket prices and cost-cutting programs.

According to Centre for Aviation data, jet fuel prices have fallen by about 23% from their peak levels at the beginning of April, but are still more than twice as high as pre-war levels. A potential agreement that would restore normal shipping through the Strait of Hormuz would significantly ease supply restrictions ahead of the peak summer tourist season.

Optimism is fragile: key disputes remain

Despite the short-term optimism, analysts warn that the positions of the warring parties on key contentious issues remain far apart. Among the most debated issues are the volume of Iran's enriched uranium stockpiles and the conditions under which sanctions against Tehran could be eased or lifted.

Trump himself urged officials "not to rush into signing a deal," even while promoting the progress achieved. Last week, Reuters reported that Iran is ready to discuss maritime safety protocols, but details were not made public. In this context, markets remain sensitive to any news related to the negotiations.

Volatile oil: from $85 to $120 per barrel

Since the beginning of the conflict, the price of Brent crude has fluctuated in a wide range – approximately between $85 and $120 per barrel. This volatility makes planning difficult for both energy companies and major fuel consumers such as airlines.

Any announcement of progress or deadlock in the negotiations with Iran leads to a sharp market reaction. The current drop in prices and the corresponding rise in airline stocks show how dependent the sector is on geopolitics – and how quickly sentiment can change again if talks fail or tensions escalate.

For now, aviation companies are using every possible "pause" in tension to stabilize their finances and prepare for the summer. But as long as there is no lasting resolution to the conflict and clear guarantees of free shipping through the Strait of Hormuz, the risk of new shocks to the fuel market remains high.