Oil in freefall on Iran deal hopes — buy airlines that win big from cheaper fuel
Oil prices just had their worst month in six years because the U.S. and Iran appear close to a peace deal that could reopen a critical shipping route for global oil supplies. At the same time, the stock market is rallying hard on the prospect of lower energy costs.
Idea
A U.S.-Iran deal would reopen the Strait of Hormuz, the world's most important oil shipping lane, which has been blocked since the conflict began in February. That would unleash a flood of supply and likely push oil prices even lower. Airlines are one of the biggest winners when jet fuel gets cheaper — fuel is their single largest expense. With oil posting its worst monthly loss in six years and a deal decision imminent, airlines are poised for a relief rally as their cost outlook dramatically improves.