IndiGo, SpiceJet shares fall up to 5% as crude oil prices spike amid US-Israel-Iran war

Indian aviation stocks took a hit on Monday, March 2, as increasing geopolitical tensions in the Middle East impacted crude oil prices and disrupted travel.

InterGlobe Aviation (IndiGo) shares witnessed a fall of over 5%, while SpiceJet shares declined almost 4% in early trading today as the ongoing conflict affects key transit points and raises worries about surging fuel costs.

The Iran-Israel conflict has resulted in the closure of significant airspaces in the Gulf region. Indian airlines, such as IndiGo, Air India, and SpiceJet, have cancelled more than 350 international flights as of yesterday, with additional disruptions and technical stops (for instance, in Rome for North American routes) continuing into today.

As per reports, analysts have indicated that IndiGo could see a potential 13% decline in its Earnings Per Share (EPS) for each $5 rise in Brent crude prices. Fuel usually represents 40% of an airline's operational costs, making the industry particularly vulnerable to the recent spike in oil prices.

In order to preserve links to the US and Europe, airlines are adjusting flight paths, which is anticipated to lead to longer flight durations and increased operational costs.

Harshal Dasani, Business Head, INVasset PMS, explained that aviation is under pressure as crude prices harden and uncertainty rises. “Fuel accounts for a significant portion of airline operating costs, and any sustained spike in oil directly compresses margins. Add to that potential airspace disruptions, higher insurance premiums, and weaker discretionary travel demand if tensions persist — the risk profile for the sector rises sharply,” he said.

Geopolitical turmoil weighs on outlook

Brokerage firm Emkay noted that the escalating conflict in the Middle East has turned large portions of its airspace into a 'no-go' area, leading to the cancellation and rerouting of numerous flights. The DGCA has also released a safety advisory (valid until March 2) for all airlines, advising them to steer clear of 11 countries in the region.

“This is likely to disrupt international operations, while rerouting would increase flight time and fuel costs. Further, a spike in crude oil prices amid geopolitical turmoil would increase fuel costs, weighing on airline profitability, though the airlines are likely to partially pass on the increase,” said the brokerage.

Technical Views

InterGlobe Aviation share price opened at an intraday low of ₹4,460.90 apiece on the BSE, the stock touched an intraday high of ₹4,664.95.

According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, amidst rising crude oil prices tensions, prices have seen a gap down opening however there's some respite at Jan swing lows around ₹4,500 and remains a key level to watch in near term, a break below this could trigger further weakness towards ₹4,200. On flip side immediate resistance is seen around bearish gap left today around ₹4,800.

Spicejet share price today opened at ₹15.31 apiece on the BSE, the stock touched an intraday high of ₹15.60, and an intraday low of ₹14.91 per share.

Bhosale, said that last week there was bounce from lower levels, however, this remains in a down trend and compared to its peer (indigo) remains a sell on rise candidate , 12 is the next support and 16.5 as resistance.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.