Asian airline shares drop as US-Iran conflict disrupts flights and pushes oil prices higher

US-Iran dispute disrupts flights and raises oil prices, causing a fall in the value of Asian airline stocks.

Following the weekend strikes on Iran by the U.S. and Israel, which disrupted travel and sent global oil prices soaring, shares of significant Asian airlines saw a dramatic decline on Monday. Early trading saw a drop of more than 5% for Japan Airlines, Singapore Airlines, Qantas Airways of Australia, and Cathay Pacific of Hong Kong.

Major Middle Eastern hubs like Dubai and Doha remained closed for the third day in a row, causing numerous flight cancellations and leaving tens of thousands of travelers stranded because of the continued disruption to international air travel. As strikes in the area interrupted shipments from major producing regions, oil prices increased 7% to reach their highest point in months.

After a 10.4% drop at the start of trade in Australia, Qantas shares later recovered somewhat to trade down roughly 6%. Other Asian carriers that also saw a fall of at least 4% include Taiwan's China Airlines and EVA Airways, Malaysia's AirAsia X, and Japan's ANA Holdings, Air China, China Southern Airlines, and China Eastern Airlines.

Although Qantas does not operate in Middle Eastern airports, it did confirm that its flights were not immediately impacted and provided free booking modifications to customers who were impacted by the war. All flights to Dubai and Riyadh were canceled by Cathay Pacific until further notice, while Singapore Airlines halted its Dubai flights through March 7 and Japan Airlines briefly canceled its Tokyo-Doha service.

The ongoing U.S.-Iran tensions continue to pose challenges for global air travel, affecting passengers and airline operations alike, while also contributing to increasing fuel prices.