Qantas Airways Ltd (ASX: QAN) shares are gaining altitude today as global oil prices continue to come off the boil.
Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed yesterday trading for $9.94. During the Tuesday lunch hour, shares are changing hands for $10 apiece, up 0.6%.
For some context, the ASX 200 is down 0.5% at this same time as investors await this afternoon's interest rate announcement from the RBA.
But with the Brent crude oil price down 4.5% since Friday to trade for US$83.41 per barrel today (according to data from Bloomberg), investors are eyeing potentially juicier profits – and higher dividends – from Qantas.
The airline reports its full-year FY 2026 results in August.
Image source: Getty Images
Why is the oil price crashing back to earth?
As you're likely aware, the past month's decline in the global oil price has been driven by increased hopes of a peace deal in the oil-rich Middle East.
With a deal now on the table intended to bring an end to the Iran war, US President Donald Trump has promised that oil tankers will again begin to move freely through the crucial Strait of Hormuz by Friday.
The narrow shipping lane, which before the conflict saw around 20% of the world's LNG and oil pass through it, has been essentially shuttered since the commencement of the Iran war at the end of February.
Indeed, one month ago, on 18 May, this saw the Brent crude oil price at US$112.10 per barrel, or more than 25% above current levels.
Spurred in part by that tumbling oil price, Qantas shares have quietly soared 18.4% since market close on 18 May, racing ahead of the 4.3% gains posted by the benchmark index over this same period.
Why a lower oil price really matters for Qantas shares
Atop the fact that an end to the Middle East conflict should help boost international travel demand, Qantas shares are highly sensitive to the oil price.
Or, more specifically, the cost of jet fuel.
How sensitive?
On 26 February – directly before the outbreak of the Iran war – Qantas reported that it expected to spend around $2.5 billion on jet fuel in the second half of the 2026 financial year (H2 FY 2026).
But just six weeks later, the airline reported that the surging oil price had materially blown out that cost guidance.
On 14 April, Qantas amended its second-half jet fuel cost expectations to be in the range of $3.1 billion to $3.3 billion. Meaning the airline could spend up to $600 million more on jet fuel than it had expected in February.
