Iran ceasefire agreement causes oil prices to plummet; US airline stocks surge before the market opens

Investing.com - In pre-market trading on Wednesday, shares of U.S. airlines surged sharply after the United States and Iran reached a conditional ceasefire agreement. Oil prices plunged, easing a conflict that has been troubling the energy market for more than five weeks.

As of 05:42 a.m. Eastern Time, shares of Delta Air Lines, United Airlines, and American Airlines were up 6% to 8%, with crude oil falling to its lowest level since March 25. At the time of writing, Brent crude was down 14.1%, to $93.83.

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Aviation fuel costs are among the biggest expenses for airlines, and their prices are closely tied to crude oil, so the drop in oil prices is a major positive for airline profitability.

The oil price plunge came after President Trump said late Tuesday that he agreed to pause a planned two-week series of attacks on Iran’s infrastructure, contingent on Iran agreeing to immediately reopen the Strait of Hormuz.

“This will be a two-way ceasefire!” Trump wrote on Truth Social. “The reason for this is that we have reached and surpassed all military targets, and made substantial progress on a clear agreement with Iran for long-term peace, as well as peace in the Middle East.”

Iran’s foreign minister, Aragchi, also said on behalf of the country’s Supreme National Security Council that Iran’s armed forces would “stop its defensive actions.”

Trump backed down after issuing a series of threats in recent weeks. He said negotiation progress led him to agree to a ceasefire. Iran put forward a 10-point proposal, which he called a “workable basis” for talks, and he expected the agreement to be finalized within two weeks.

The market responded positively, with global stock markets rising after the announcement of the agreement.

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