Iran War Triggers Surge in Oil Prices
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 24 2026
0mins
Source: CNBC
- Surging Oil Prices: Since the onset of the U.S.-Iran war on February 28, oil prices have soared over 40%, with Brent crude reaching above $112 per barrel, resulting in significant spikes in gasoline and jet fuel prices that heavily burden consumers.
- Price Gouging Alerts: Senator Elizabeth Warren has urged the Federal Trade Commission to monitor businesses potentially exploiting the conflict by unfairly raising prices, arguing that this could unjustly impact everyday Americans.
- Jet Fuel Cost Surge: Jet fuel prices have increased by approximately 106% compared to a month ago, prompting airlines to raise fares or impose fuel surcharges, with expectations that airfares will be 5-10% higher than previously anticipated in 2026 and 2027.
- Rising Cost of Living Concerns: The escalating energy costs have intensified consumer worries about the cost of living, becoming a focal point for both Democrats and Republicans ahead of the 2026 midterm elections, highlighting the severity of the economic situation.
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Analyst Views on UAL
Wall Street analysts forecast UAL stock price to rise
16 Analyst Rating
15 Buy
1 Hold
0 Sell
Strong Buy
Current: 112.620
Low
115.00
Averages
139.07
High
156.00
Current: 112.620
Low
115.00
Averages
139.07
High
156.00
About UAL
United Airlines Holdings, Inc. is a holding company. The Company transports people and cargo throughout North America and to destinations in Asia, Europe, Africa, the Pacific, the Middle East and Latin America. The Company, through United Airlines, Inc., and its regional carriers, operates across over six continents, with hubs at Chicago O'Hare International Airport (ORD), Denver International Airport (DEN), George Bush Intercontinental Airport (IAH), Los Angeles International Airport (LAX), Newark Liberty International Airport (EWR), San Francisco International Airport (SFO), Washington Dulles International Airport (IAD) and A.B. Won Pat International Airport (GUM). Its hub and spoke system allow it to transport passengers between a large number of destinations with frequent services. The Company has contractual relationships with various regional carriers to provide regional aircraft service branded as United Express. It provides freight and mail transportation services (Air Cargo).
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Strong Recovery Performance: United Airlines' Q1 results indicate resilience in core business despite high fuel costs, with premium revenue up 14%, loyalty revenue rising 13%, and business revenue increasing 14%, demonstrating the effectiveness of its 'United Next' strategy in enhancing revenue quality.
- Improved Technical Indicators: The stock has crossed above its 200-day moving average, trading above $101 recently, with both 1-month and 6-month trends turning bullish, confirming a shift from repair to accumulation, while the $100-$105 zone now serves as a key support area.
- Strong Management Response: Despite a $340 million year-over-year increase in fuel expenses in Q1, United still delivered profits and expanded pre-tax margins, with management adjusting capacity plans for the remainder of 2026 to account for higher fuel prices by reducing planned capacity by five points.
- Attractive Valuation: Trading at approximately 11x forward earnings, United Airlines is significantly undervalued compared to transportation peers, even as it shows above-industry growth expectations, indicating that the market is still pricing in a large fuel and macro discount that could narrow quickly.
See More
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- Merger Plans Shelved: United Airlines CEO Scott Kirby announced at the Bernstein investor conference that the airline will suspend any consolidation plans for the foreseeable future following American Airlines' rejection of his merger proposal, highlighting the challenges and uncertainties in industry consolidation.
- Lack of Partners: Kirby emphasized that while he believes a large transaction would make economic sense for United, the absence of a willing partner has stalled any merger initiatives, reflecting the competitive landscape of the current airline industry.
- View on JetBlue: Kirby dismissed speculation regarding a merger with JetBlue Airways, stating that United would need to improve JetBlue's margins by about 25 percentage points for a deal to be feasible, which he termed
See More
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- Oil Price Plunge: Oil prices dropped over 5% on Wednesday after Secretary of State Marco Rubio indicated that Washington was giving Iran talks 'every chance to succeed,' reflecting market sensitivity to diplomatic efforts and potentially impacting energy sector profitability.
- Escalation of Military Actions: New U.S. airstrikes in Iran targeted a military site deemed a threat to U.S. forces and commercial maritime traffic, adding uncertainty to the ongoing diplomatic negotiations and prompting investors to reassess risk levels in the market.
- Strong Tech Stock Performance: Shares of cloud-based AI and data platform company Snowflake surged 36% following a strong earnings report and a $6 billion investment plan in Amazon Web Services, showcasing investment enthusiasm and market confidence in the tech sector amid rising AI demand.
- Inflation Data Focus: Investors are closely watching the upcoming April inflation reading, which is expected to influence the Fed's future rate decisions, as Minneapolis Fed President Neel Kashkari emphasized that lowering inflation remains a top priority, indicating market sensitivity to economic policy.
See More
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- Market Performance: On Wednesday, the S&P 500 Index rose by 0.02%, the Dow Jones Industrial Average increased by 0.36% to a new record high, while the Nasdaq 100 fell by 0.09%, indicating a divergence in market sentiment amid enthusiasm for artificial intelligence and declining oil prices.
- Oil Price Fluctuations: Crude oil prices plummeted over 5% to a five-week low due to optimism surrounding a US-Iran peace deal, which eased inflation expectations and pushed the 10-year Treasury yield down to a 1.5-week low of 4.45%, providing support for the bond market.
- Mortgage Application Decline: US MBA mortgage applications fell by 8.5% for the week ending May 22, with the purchase mortgage sub-index down 0.4% and the refinancing sub-index down 18.1%, reflecting the dampening effect of high interest rates on housing demand, as the average 30-year fixed mortgage rate rose to 6.65%.
- Corporate Earnings Outlook: As of Wednesday, 83% of the 475 S&P 500 companies that reported Q1 earnings exceeded expectations, with projected earnings growth of 12% year-over-year, but excluding the technology sector, the growth is only 3%, indicating signs of overall earnings weakness.
See More
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- Starlink Advantage: United Airlines CEO Scott Kirby stated that Starlink will be a key differentiator for the airline compared to competitors, with full fleet deployment expected next year, enhancing passenger experience and strengthening market competitiveness.
- Profit Outlook: Kirby expressed confidence in achieving double-digit pretax margins by 2027, noting that if current conditions persist, a decline in oil prices will facilitate full fuel cost recovery, thereby improving financial performance.
- Industry Consolidation Participation: Kirby emphasized United Airlines' active participation in future industry consolidation, despite American Airlines recently rejecting a merger proposal, indicating that he still views large transactions as economically sensible, showcasing the company's keen market insight.
- Analyst Target Upgrades: UBS and TD Cowen raised their price targets for United Airlines to $148 and $150 respectively, reflecting analysts' optimistic expectations for approximately 50% EPS growth by 2027, further boosting investor confidence.
See More
United Airlines CEO Rules Out Future Consolidation Plans
- Consolidation Plans Shelved: United Airlines CEO Scott Kirby stated at a Bernstein investor conference that the airline does not plan to pursue consolidation in the foreseeable future, as American Airlines rebuffed his merger proposal, highlighting the challenges and uncertainties in industry consolidation.
- Lack of Economic Logic: Kirby noted that the 'big transaction' United attempted was the only economically sensible option, but the absence of a willing partner has rendered this plan unfeasible, reflecting the complexities of consolidation in the airline sector.
- No Small Deals Expected: In response to investor speculation about pursuing smaller deals, Kirby dismissed the idea as 'idiotic,' clearly stating that this is not the company's plan, indicating a focus on internal growth rather than external acquisitions.
- Optimistic Profit Outlook: Kirby expressed increasing confidence that United can achieve double-digit pre-tax margins next year, as easing oil prices and strong demand will help the airline recover from the impacts of high fuel costs, demonstrating the company's resilience and potential in the market.
See More
