Kamal Ghorui
Oil prices plunge, bring cheer to aviation stocks! Shares of airline operators IndiGo and SpiceJet surged by as much as 8 per cent on Tuesday after US President Donald Trump indicated that the conflict with Iran could soon come to an end. His remarks helped cool the sharp rally in crude oil prices and raised expectations of easing tensions in the oil-rich Middle East following several days of heightened hostilities.IndiGo’s stock climbed about 6 per cent to reach an intraday high of Rs 4,475 on the BSE, while SpiceJet rose nearly 8 per cent to touch a day’s high of Rs 14.1 per share. Airline stocks had previously come under heavy pressure as geopolitical tensions pushed oil prices sharply higher, with crude surging around 30 per cent on Monday.The rally in crude had taken prices past the crucial $100-per-barrel level for the first time since Russia’s invasion of Ukraine in 2022, amid fears that the Strait of Hormuz could remain shut for an extended period.Speaking to CBS News on Monday, Trump said he believed the war with Iran “is very complete” and that the United States was “very far ahead” of the four- to five-week timeframe he had earlier projected. He also told reporters that his administration planned to lift sanctions on certain countries as part of efforts aimed at stabilising global oil markets.“So we have sanctions on some countries. We’re going to take those sanctions off until the Strait is up,” he said, without elaborating further. “It’s going to be ended soon, and if it starts up again they’ll be hit even harder,” he added.
US may consider easing oil sanctions on Russia
US President Donald Trump is weighing the possibility of relaxing oil sanctions on Russia and releasing crude from emergency stockpiles as part of a broader set of measures aimed at containing the surge in global oil prices linked to the conflict with Iran, according to people familiar with the matter. Trump has also said that he had a “very good call” with Russian President Vladimir Putin regarding the war in Ukraine.Following Trump’s remarks, oil prices dropped sharply on Tuesday after climbing to their highest level in more than three years in the previous session. Brent crude futures declined nearly 10 per cent to $89.32 per barrel, while US West Texas Intermediate (WTI) crude slipped more than 9 per cent to $86.07 per barrel.Shares of InterGlobe Aviation, the parent company of India’s largest airline IndiGo, had fallen over 3 per cent on Monday and are down more than 14 per cent over the past month. The decline during the previous session came despite Kotak Institutional Equities upgrading the stock to a ‘Buy’ rating with a target price of Rs 5,500 per share, which implies an upside potential of more than 29 per cent from the previous closing level of Rs 4,251.2.Kotak noted that airlines’ significant exposure to fluctuations in crude oil prices and jet fuel spreads makes it difficult to accurately estimate cost structures or assess the price elasticity of near-term demand. However, the brokerage said investors should pay closer attention to the mounting losses among IndiGo’s competitors. It added that airline stocks should be viewed less as proxies for oil prices and more as a reflection of consumer spending trends.Shares of SpiceJet also faced heavy selling pressure, falling about 7 per cent on Monday and nearly 41 per cent over the past month.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
