An American Airlines Boeing 737 Max 8 aircraft.
Scott McIntyre | Bloomberg | Getty Images
Shares of industries with high fuel costs like airlines and cruise-lines dropped on Monday as crude oil and gasoline futures spiked. Shares of retailers fell on fears higher gasoline costs would hurt future sales and hurt profit margins.
Oil prices are soaring after an attack on Saudi Arabia’s oil industry over the weekend forced the kingdom to cut its oil output in half. Brent crude futures, the international benchmark, rose as much as 19.5% to $71.95 per barrel and U.S. West Texas Intermediate (WTI) futures climbed as much as 15.5% to $63.34. U.S. gasoline futures surged more than 9%.
The event marks the largest disruption to the world oil supply in history, knocking out about 5.7 million barrels per day.
Evercore ISI said a spike in oil prices could “require a resent of revenue expectations” for airlines.
“Higher fuel serves as a healthy reminder of the volatility of the inputs and may prove timely as carriers contemplate ’20 growth plans and cadence of Max returns,” said Evercore’s Duane Pfennigwerth in a note to clients Monday.
Morgan Stanley said exploration and production companies are the best positioned within the Energy Sector to capture the benefit of the short-term rally in oil prices.
“While higher leverage and cost structure mid-cap stocks might rally most in response to the price spike, we continue to prefer low cost structure companies that are positioned to outperform in any oil price environment,” said Morgan Stanley equity analyst and commodities strategist Devin McDermott in a note to clients on Monday.
—with reporting from CNBC’s Michael Bloom.