Lower Fuel Costs Lift Airline Sector
European airline shares surged on Friday after crude oil prices fell sharply, driven by renewed optimism over a potential agreement between the United States and Iran.
Investor sentiment improved after U.S. President Donald Trump stated that the United States had “ended the war with Iran,” referring to a proposed memorandum of understanding that would reopen the Strait of Hormuz and include Iranian commitments not to pursue nuclear weapons.
By 10:28 a.m., Brent crude had fallen 4.4% to $86.39 per barrel, while WTI crude dropped 4.5% to $83.77, leaving both benchmarks at their lowest levels in almost two months.
Airline Shares Rally Across Europe
The decline in fuel prices provided a significant boost to airline stocks, which are highly sensitive to changes in energy costs.
Shares across the sector gained between 4.1% and 8.5%, with Air France-KLM (EU:AF) leading the advances. EasyJet (LSE:EZJ) posted the smallest gain among the major carriers.
Other airlines participating in the rally included Ryanair (LSE:0A2U), Lufthansa (TG:LHA), Wizz Air (LSE:WIZZ), Finnair (TG:FAI0), IAG (LSE:IAG) and Norwegian Air Shuttle (TG:NWC).
Proposed Agreement Could Reopen Strait of Hormuz
According to reports cited by Axios, the proposed framework would allow shipping traffic to resume through the Strait of Hormuz without transit charges, while extending the existing ceasefire by 60 days, including in Lebanon.
The agreement would also provide sanctions relief for Iran in exchange for compliance with agreed commitments, while the United States would lift its naval blockade.
Trump indicated that Vice President JD Vance could attend a signing ceremony in Europe as early as this weekend if negotiations progress as expected.
Iran Remains Cautious
Speaking during a telephone campaign event supporting Alabama Senate candidate Barry Moore, Trump said: “We have reached a great agreement. There will be no nuclear weapons. People will begin to go home very soon. It’s practically, practically finalized. We got everything we wanted.”
However, Iranian officials appeared more cautious. The semi-official Fars news agency reported that negotiators had not yet approved the text of any agreement, citing an unnamed source close to the discussions.
Iran was also absent from the list of countries that Trump said had already endorsed the proposed framework, leaving uncertainty over whether a final deal will ultimately be reached.
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