Key Highlights

● WTI rose 2.18% to $104.20 and Brent climbed 2.5% to $117.80.

● Brent is up about 12% to 14% in October at a six-month high.

● Wider refining margins could push jet fuel prices up faster than crude.

● Strong GDP and low jobless claims suggest travel Demand may stay firm.

Oil prices pushed higher again on Friday, raising the stakes for one of the most fuel-sensitive corners of the stock market. West Texas Intermediate rose 2.18% to $104.20 a barrel and Brent climbed 2.5% to $117.80 as of about 7:28 a.m. ET, according to live market coverage.

Crude keeps climbing

The drivers are geopolitical. Iran said four tankers struck mines in the Strait of Hormuz, with the Revolutionary Guards saying three caught fire, and Yemen's Houthis claimed attacks on Saudi sites including Ras Tanura, the Rabigh refinery and an Aramco Facility at Abqaiq, according to a market report. Brent is up about 12% to 14% in October and at a six-month high, and WTI could finish a month above $100 for the first time since April.

Why airlines are exposed

Jet fuel is typically one of an airline's largest operating costs, alongside labor. When crude and refined product prices jump, carriers either absorb the hit or try to pass it on through higher fares, which can dent demand.

This shock has a refining twist that matters for airlines. Exxon Mobil (NYSE:XOM) earned more from refining than from Upstream production for the first time in at least six years, according to media reports, because attacks on Saudi and Russian refineries and the effective closure of Hormuz have squeezed fuel-making capacity. Wider refining margins mean the price of jet fuel can rise faster than crude itself, although none of the available market data quoted current jet fuel prices.

No airline-specific premarket moves were reported in the available market data, so it is not possible to confirm how carriers are trading this morning. SkyWest (NASDAQ:SKYW), a regional carrier, reported results after Thursday's close, but its figures were not retrieved, so its read on fuel costs remains unknown.

The Dow Jones Transportation Average includes major carriers such as Delta Air Lines (NYSE:DAL), United Airlines (NASDAQ:UAL), American Airlines (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV), alongside railroads, truckers and parcel companies. Broader market tone is mixed: Dow futures were roughly flat around 8 a.m. ET, while S&P 500 futures were down about 1.1% and Russell 2000 futures about 0.6%, according to market quotes.

Counterarguments, risks and what to watch

Higher fuel costs are not automatically disastrous. Airlines have spent recent years pushing premium cabins and loyalty programs that generate higher-margin revenue, and a strong economy can support fares. US third-quarter GDP grew at an annualized 3.4%, above the 3.2% consensus, and weekly jobless claims fell to 194,000, according to market data, suggesting travel demand may stay firm.

Diplomacy is another wild card. Qatari mediators returned to Tehran on Friday to push for a deal to end the US-Iran war, according to media reports. A breakthrough could quickly drain the risk premium from crude and give airline stocks relief.

The downside scenario is escalation. Regional officials fear fighting could resume around the Nov. 3 midterms, according to media reports. A prolonged closure of Hormuz would keep crude and refined products elevated into the holiday travel season.

Monetary policy adds pressure. The Fed hiked in September and markets price about 85% odds of another hike in December, according to market reports, which could cool consumer spending on discretionary travel.

Watch airline shares at the 9:30 a.m. ET open for confirmation of how investors are pricing the fuel shock. Sunday's OPEC+ subgroup meeting on December output, any developments in US-Iran talks and next Friday's October jobs report will shape the outlook for both oil and travel demand.