Southwest Exposed to Fuel Costs as Oil Surges Past $100 After Tanker Attacks
Oil briefly topped $100 per barrel after Iranian attacks on two tankers near Iraq’s al-Faw port, driving jet fuel up 15% and threatening $5 billion in quarterly costs across major U.S. airlines. Southwest Airlines dropped 2.7% after ending its fuel hedging program, leaving it fully exposed to price spikes.
1. Oil Price Surge and Tanker Attacks
In early trading, Brent crude briefly topped $100 per barrel and U.S. West Texas Intermediate climbed above $94 after two oil tankers were struck near Iraq’s al-Faw port. The incidents triggered concerns about supply disruptions in the northern Persian Gulf region.
2. Impact on Jet Fuel Costs
Jet fuel prices have risen by roughly 15% over the past week, translating to an increase of up to $1.75 per gallon. The spike threatens to add nearly $5 billion in quarterly fuel expenses for the three largest U.S. airlines combined.
3. Southwest Airlines’ Hedging Exit
Southwest Airlines ended its fuel hedging program for 2025, leaving the carrier fully exposed to spot market pricing as fuel costs climb. Shares fell 2.7% in pre-market trading on elevated exposure to oil price swings.
4. Potential Earnings and Fare Implications
Analysts warn that sustained crude oil prices above $95 per barrel could force 5–10% downgrades to Q2 earnings estimates, with unhedged operators most at risk. Carriers may raise ticket prices in the coming months to offset higher fuel outlays.