The start of another war in the Middle East didn’t lead to a market crash but for two members of the FTSE 100, their shares ended the week (6 March) considerably cheaper than when it started.
But does this mean these stocks are now in bargain territory? Or could there be worse to come? Let’s see.
Uncertain times
Since the start of hostilities, the FTSE 100’s fallen by nearly 5%. Although a full-blown crash has been avoided, the index is likely to fall further if there’s no quick resolution. And with thousands of people killed so far, we have to hope the conflict ends soon.
News reports have reminded us that the region produces around a third of the world’s oil. And around 20% is transported though the Strait of Hormuz. Unsurprisingly, oil prices have risen nearly 10% to $80 a barrel during the past five days. But the US Navy has been deploying ships to the Gulf for weeks and the price of Brent crude has been steadily rising since the middle of January.
Out of favour
Two FTSE 100 stocks that have suffered more than most from the fallout are International Consolidated Airlines Group (LSE:IAG) — the owner of five airlines including British Airways — and easyJet.
Both have been hit by fears that rising jet fuel costs could damage earnings. In addition, there could be a significant loss of revenue. With most of its business concentrated in Europe, easyJet’s likely to have to cancel fewer flights. However, Türkiye is a popular destination for its package holiday business, and shares a land border with Iran.
In 2025, fuel costs and emission charges (€7.1bn) accounted for 25% of IAG’s total expenditure on operations. In 2023 — the last time jet fuel costs spiked — the figure was 29%. All other things being equal, an increase of four percentage points could cost the airline €1.1bn. For the year ended 30 September 2025, easyJet’s fuel spend (£2.3bn) was equal to 24% of headline costs.
To some extent, forward buying of jet fuel helps mitigate costs. But there’s only so much that can be hedged. For example, at 24 February, 62% of International Consolidated Airline’s estimated fuel requirement for 2026 had been locked in at a fixed price.
What next?
Qatar’s energy minister has told the Financial Times that if the situation persists, oil could hit $150 which, he said, would “bring down the economies of the world”. Given that there’s no end in sight, I reckon there could be worse to come for the International Consolidated Airlines share price.
However, when the conflict ends, things could look very different. Although there are no guarantees, history shows that the stock usually recovers strongly from these types of events.
At the height of the pandemic in September 2020, following an emergency rights issue, the group’s shares were changing hands for close to 100p. In March 2022, when energy prices soared after Russia’s invasion of Ukraine, the stock was trading around 125p. Today (6 March), one share costs around 365p.
With its global brands capitalising on a strong desire to fly, the airline’s proven to be remarkably resilient in recent years. That’s why I think it’s a stock to consider when current events – hopefully – start to calm down.
