Investing.com — Oil prices surging above $100 a barrel due to the Iran war could significantly pressure airline profitability, though the broader commercial aerospace cycle is likely to remain resilient, according to analysts at Bernstein.

The escalation in the Middle East has sharply altered the oil market outlook, shifting expectations from a supply surplus before the conflict to a potential deficit if disruptions persist. The conflict has already pushed sharply higher and raised concerns about supply risks linked to the Strait of Hormuz, a critical route for global energy shipments.  

Higher fuel costs pose a direct challenge for airlines because jet fuel is one of their largest operating expenses. When oil rises due to a supply shock rather than strong economic demand, carriers typically struggle to pass the additional costs on to passengers quickly enough, which squeezes profit margins.

Bernstein noted that the recent surge in energy prices has been accompanied by a sharp increase in jet fuel refining margins, further intensifying cost pressures for airlines. The current spike reflects both crude price gains and disruptions to refined fuel supply chains in the region.  

However, the impact varies widely across carriers depending on business models, hedging strategies and route networks. Network airlines generally spend a smaller share of revenue on fuel compared with low-cost carriers, making them somewhat more resilient to oil price shocks. Airlines with stronger balance sheets, diversified revenue streams and higher margins are also better positioned to absorb rising fuel costs.

Bernstein highlighted that some airlines have significant fuel hedging in place for 2026, which could cushion the near-term impact of higher prices. In addition, carriers with exposure to Asian routes may benefit if passengers avoid connecting through Middle Eastern hubs affected by the conflict.  

Despite the pressure on airlines, the broader aerospace sector could prove more resilient. Aircraft manufacturers such as and are supported by massive order backlogs stretching nearly a decade of production, which reduces the risk of large-scale order cancellations even if airline profitability weakens.

The bigger risk lies in the aircraft maintenance and aftermarket segment. If airline earnings deteriorate, carriers may delay engine overhauls or reduce aircraft utilization, which could weigh on maintenance revenue for aerospace suppliers.

Bernstein said the key factor for the sector will be the duration of the conflict and its impact on oil prices. A short disruption lasting a few months may keep crude prices elevated but manageable, while a prolonged closure of key energy routes could push oil prices significantly higher and create deeper pressure across the aviation industry.