The aviation industry is among the most immediate victims of the oil price explosion triggered by the Iran conflict, with airline stocks suffering dramatic falls as Brent crude surged past $90 a barrel for the first time since April 2024. IAG, the parent company of British Airways, saw its shares tumble more than 12% during the week, while budget carrier Wizz Air lost nearly a fifth of its value and issued a profits warning predicting the crisis could cost it €50 million.
The oil price spike — more than 25% in a single week — is the steepest since the early Covid-19 pandemic period and shows little sign of abating. Kuwait’s decision to cut output at fields running out of storage space triggered Friday’s biggest price move, and energy consultants now warn that Saudi Arabia and the UAE face the same storage crisis within 20 days. The prospect of further production cuts has kept oil prices elevated across the week.
For airlines, the mathematics of soaring oil prices are brutal. Jet fuel typically accounts for a significant portion of airlines’ operating costs, meaning that a 25% increase in crude prices can wipe out months of profitability in a matter of days. The situation is compounded by the uncertainty around the duration of the conflict, which makes it nearly impossible for carriers to hedge fuel costs effectively or plan capacity with confidence.
Beyond aviation, the crisis is spreading across the economy. Qatar’s energy minister has warned that all Gulf producers could halt output within weeks if the conflict continues, potentially sending oil to $150 a barrel. LNG exports from Qatar — around 20% of global supply — are already disrupted following a drone strike on a key terminal, and European gas prices have surged to three-year highs as a result.
Financial markets have absorbed the shock badly. The UK’s FTSE 100 fell more than 5% on the week — its worst performance since the Trump tariff shock of April 2025 — while Asian and European indices fared similarly. Government bond yields jumped, UK interest rate cut expectations collapsed, and inflation fears returned with a vengeance. Economists are now scrambling to revise their forecasts for growth and price stability.