Shares of major U.S. airlines rose Monday as oil prices fell following OPEC+'s decision to ramp up production. American Airlines Group Inc (NASDAQ:AAL) surged 3.56% to $10.94, Delta Air Lines Inc (NYSE:DAL) gained 3.12% to $45.67, and United Airlines Holdings Inc (NASDAQ:UAL) rose 2.2% to $75.70.
What To Know: The rally comes after WTI crude futures dropped nearly 2%, settling just below $57 per barrel. The decline was triggered by OPEC+'s announcement that it will increase oil production by 411,000 barrels per day in June, adding to similar hikes in April and May.
Altogether, the bloc has reversed nearly half of the voluntary cuts made since 2022, aiming to discipline overproducing members like Iraq and Kazakhstan and reclaim market share.
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Lower oil prices are a major tailwind for airlines, which count jet fuel--closely tied to crude prices--as one of their largest operating expenses. Falling fuel costs can significantly improve profit margins, especially for carriers operating on thin margins like American.
With oil now trading well below the $65 per barrel threshold, investors on Monday are likely betting that airlines will benefit disproportionately from the energy market shift--explaining Monday's broad gains across the sector.
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