Global airline stocks tumbled on Friday as Israel's widescale strikes on Iran drove a more than 9 per cent surge in oil prices and prompted carriers to clear out the airspace over Israel, Iran, Iraq and Jordan, reports Reuters.
Travel and leisure stocks also fell as Iran's retaliation raised fears of supply disruption at the Strait of Hormuz, a crucial chokepoint for about a fifth of global oil consumption.
Iran has in the past threatened to close the strait for traffic in retaliation to Western pressure.
"If oil is caught in the crossfire, we anticipate that President Trump will seek OPEC spare barrels to try to keep a lid on prices and shield US consumers from the economic impact of the Middle East conflict," RBC analyst Helima Croft said.
Meanwhile, carriers scrambled to divert and cancel flights, Flightradar24 data showed.
"Higher oil prices are especially impactful to cruise lines as fuel is their second most impactful cost line item behind labor expense," said Patrick Scholes, analyst at Truist Securities.
"Such macro-political issues are never a positive for travel companies."
Rising global conflict zones have strained airline profitability as detours drive up fuel costs and extend flight times.
US-based Delta, Latvia's airBaltic, Greece's Aegean Airlines, Ryan Air and Air India are among carriers that have either cancelled or diverted flights.
Shares of European airlines Air France-KLM fell more than 5 per cent, while Lufthansa and EasyJet were down as much as 4 per cent.
Delta Air Lines, American Airlines and United Airlines slid between 4 per cent and 5 per cent.
"There will be some global slowdown in booking pace, as we saw after previous conflicts and consumers wait to see the level of escalation," said Richard Clarke, analyst at Bernstein.
Shares of cruise operators such as Norwegian Cruise Line and Carnival Corp were down between 2 per cent and 4 per cent, while online travel agencies Booking Holdings and Expedia shed more than 2 per cent.
"All else equal, higher gas prices are a tax on consumers and a cost input for cruise and airline operators, which could hinder spending on all items, including travel," said Dan Wasiolek, analyst at Morningstar Research.
Conflict-driven uncertainties lifted crude prices, boosting shares of US oil majors Exxon Mobil and Chevron between 1 per cent and 3 per cent, while oilfield services companies SLB and Halliburton rose 3 per cent.
Shares in European container giant Maersk and Hapag-Lloyd rose 4 per cent and 1.5 per cent, respectively. Tankers such as Frontline, Torm and Euronav gained more than 2 per cent.
