Shipping Stocks Surge, Airlines Plunge as US-Iran Conflict Rattles Markets

The outbreak of war between the United States and Iran is creating stark divergence among transportation stocks. Airline shares are falling on concerns over rising fuel costs from higher oil prices, while shipping stocks are climbing on expectations of increased maritime freight rates.

According to the Korea Exchange, as of 2:17 p.m. on the 3rd, Korean Air was trading at 25,600 won, down 8.90% from the previous session. Jeju Air (-6.73%), T'way Air (-4.94%), and Jin Air (-4.24%) also showed weakness. In contrast, HMM surged 14.75% and Pan Ocean jumped 22.73%.

The divergent performance is attributed to the spike in oil prices. Brent crude futures for May delivery closed at $77.74 per barrel on ICE Futures Exchange, up 6.7% from the previous day. During intraday trading, Brent futures surged 13% to $82.37 per barrel, reaching the highest level in more than a year since January last year. West Texas Intermediate crude futures for April delivery closed at $71.23 per barrel on the New York Mercantile Exchange, up 6.3%. WTI futures also briefly spiked 12% to $75.33 per barrel, hitting the highest since June last year.

Rising oil prices negatively impact airline earnings. Fuel costs typically account for about 30% of airlines' operating expenses, meaning higher oil prices directly increase production costs. Conversely, heightened Middle East tensions increase maritime shipping risks, pushing up freight rates and improving shipping companies' earnings. Iran has declared a blockade of the Strait of Hormuz, a critical chokepoint for energy and petrochemical shipments.

"Stocks affected by oil price fluctuations are showing stark divergence in performance," a securities industry official said. "However, if the Strait of Hormuz blockade does not persist, the impact may be limited, so stock trends will depend on how the conflict unfolds."