[Feature Stock] Soaring oil prices cause airline stocks to generally weaken… Jeju Air drops over 4%

robot
Abstract generation in progress

As international oil prices surge, airline stocks are collectively under pressure in the opening minutes of trading. Due to the industry’s characteristic in which fuel costs directly affect performance, the unease over oil prices stemming from the Middle East is weighing on investor sentiment.

According to reports from a South Korean exchange, Jeju Air shares fell to 5,160 won during the day, down 260 won (4.80%) from the previous trading day. Major airline stocks also moved lower in tandem, including T’way Holdings (-4.33%), Jin Air (-4.24%), Korean Air (-3.88%), and Busan Air (-2.55%).

The rapid jump in international oil prices is cited as the direct backdrop. On the New York Mercantile Exchange (NYMEX), the June futures price for West Texas Intermediate (WTI) crude traded at $98.38 per barrel, up $2.96 (3.10%) from the previous trading day. On the London ICE Futures Exchange, Brent crude’s July futures price also reached $104.44, up $3.15 (3.11%).

The rise in oil prices is interpreted as being influenced by renewed highlights of uncertainty in negotiations between the U.S. and Iran. U.S. President Donald Trump responded to Iran via the social media platform Truth Social, saying it was “completely unacceptable,” showing a firm stance. Previously, U.S. online media Axios reported that the U.S. and Iran were close to signing a memorandum of understanding, but these remarks reduced expectations for the talks.

The airline sector is highly sensitive to changes in oil prices. Higher airline fuel prices increase the burden of fuel costs, and concerns that profitability will deteriorate are reflected immediately in stock prices. In particular, Jeju Air appears more sensitive to oil price increases amid the combined pressure from factors such as higher leasing and maintenance costs caused by unfavorable exchange-rate conditions, oversupply in the low-cost carrier (LCC) industry, and worries that earnings are slowing.

Previously, after the Muan International Airport aircraft disaster, Jeju Air’s investment sentiment cooled significantly. In addition, securities firms cut their target stock prices, leading to continued weakness in the stock price. The market believes that in the short term, oil prices and exchange-rate trends will become the core variables driving airline stock prices.

View Original
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • Comment
  • Repost
  • Share
Comment
Add a comment
Add a comment
No comments
  • Pin