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Jet fuel refining margins are surging to 20-year highs amid Iran war, threatening airlines

According to a Deutsche Bank note on Friday, airlines haven’t seen this phenomenon since the aftermath of hurricanes Katrina and Rita in 2005.

Max Knoblauch

12h

Amid the war in Iran and the resultant rising oil prices, airlines are facing a jet fuel margin squeeze not seen since the aftermath of hurricanes Katrina and Rita in 2005.

According to a Deutsche Bank note released on Friday, US jet fuel crack spreads — the difference in price between crude oil and the jet fuel refined from it — now range from $85 to $95 per barrel. That difference is equal to or higher than the cost of oil itself.

It’s a rare phenomenon airlines haven’t faced since 2005, when devastating storms caused extensive damage to several refineries. Per DB analyst Michael Linenberg, it represents an existential threat to airlines.

“Absent near-term relief, airlines around the world could be forced to ground 1,000s of aircraft while some of the industry’s financially weakest carriers could halt operations...

The last time we witnessed this phenomenon was in 2005 when crack spreads of as high as $65 per barrel exceeded ~$60 per barrel oil prices in the aftermath of Hurricanes Katrina and Rita. The damage to the airline industry was significant and widespread including major airlines Delta Air Lines and Northwest filing for Chapter 11 bankruptcy in September 2005.”

DB note- jet fuel crack spreads — (Deutsche Bank Research)

Per Deutsche Bank, airlines could face a fuel price headwind “in the $10s of billions on an annualized basis.”

Airline stocks have been pounded since the US military first struck Iran at the end of February. The big four US airlines — Delta Air Lines, United Airlines, American Airlines, and Southwest Airlines — are all down between 10% and 15% since the war began.

Budget airlines, which tend to have tighter margins and are therefore more vulnerable to pricing swings, have fallen even more. JetBlue, Allegiant, and Frontier have each fallen roughly 20%. Alaska Air is down 16% since February 28.

United CEO Scott Kirby addressed fuel costs this week, saying that the spike will have a “meaningful” impact on this quarter’s earnings results, and that higher airfares will “probably start quick.” Kirby added that demand hasn’t been affected.

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GREEN BAY, WISCONSIN - DECEMBER 07: Caleb Williams #18 of the Chicago Bears walks off the field after a loss to the Green Bay Packers at Lambeau Field on December 07, 2025 in Green Bay, Wisconsin. (Photo by John Fisher/Getty Images)

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Max Knoblauch9h

Report: Boeing could unveil 500-jet order from China during Trump’s visit later this month

Shares of Boeing are up nearly 4% on Friday afternoon, following a Bloomberg report that the company could be close to finalizing a deal to sell 500 planes to China.

The deal was first reported in August and would be one of Boeing’s largest ever.

According to Bloomberg’s sources, the deal could be officially unveiled when President Trump travels to China at the end of the month. That trip could be delayed given the war in Iran. The deal, sources say, could still fall apart — similar language to when it was first reported on more than six months ago.

Boeing has been on the outside of the Chinese market, in terms of new orders, since 2019 amid escalating US-China trade tensions.

Boeing Close to 500-Jet Order With Trump-Xi Summit

Boeing has been on the outside of the Chinese market, in terms of new orders, since 2019 amid escalating US-China trade tensions.

Matt Phillips11h

Why software shares are withstanding the war jitters

The outbreak of the war in Iran has clearly rattled investors and created a few clear winners — mostly energy stocks — and losers — consumer staples, airlines, and, well, more or else everything else.

But there is one interesting outlier to that Manichaean market dynamic.

Software shares — often the same companies that the market was giving up for dead just a few weeks ago due to overexpectations of an AI-driven disruption — have been holding up remarkably well.

These companies, including Intuit, ServiceNow, Datadog, Snowflake, IBM, Workday, and Oracle, have actually had a pretty decent run since the war started with a combined US-Israeli attack on Iran last weekend.

A new note from RBC Capital’s Rishi Jaluria suggests this isn’t just a fluke. Looking at the performance of software stocks during periods of geopolitical stress and market volatility over the last 10 and 25 years, his team found that software shares appear fairly well insulated when these broader shocks hit. RBC wrote:

“The defensive nature of SaaS models and the mission-critical nature of many core software systems at the enterprise level (e.g., in the absence of mass layoffs that may create seat-based headwinds, geopolitical uncertainty and/or market volatility typically will not cause an enterprise CIO to consider ripping out their ERP, CRM, Cyber systems, etc.”

I briefly got Jaluria on the phone yesterday, and he explained a bit more about why he thinks investors might see software as a decent place to hide out from the current chaos.

“With everything in the Middle East, you have to think about not just oil and gas input prices but also supply chains,” he said. “With software, you’re not really thinking about that.”

In other words, there is no equivalent of a closure of the Strait of Hormuz that software investors have to worry about.

Others suggested that the near-term profitability of these giant software companies — aside from concerns about potential long-term disruption from AI — may look different in the face of the economic uncertainty that seems to be growing with the war, especially after a sell-off that has left them relatively attractively valued.

Mark Moerdler, who covers software stocks for Bernstein Research, says that while the AI worries are clearly real, software companies continue to be highly productive cash cows.

“Everyone is afraid that AI is a massive disruptor, and all these articles you read talk about AI as massive disruptor or the world is ending or whatever,” he said. “You don’t see it in the fundamental numbers of the companies I cover. They are delivering GAAP profits, free cash flow, and they’re good investment ideas.”

Matt Phillips14h

The slow-motion private credit crunch continues

You may have missed it, what with the Iran war, the price of oil spiking, or the ongoing questions about the durability — and future profitability — of the AI capex boom.

But there are clear signs of malaise in private credit markets — the massive corporate bond and loan markets that typically burble away quietly in the background while the stock markets garner the headlines.

The Financial Times reported on Friday:

“BlackRock has limited withdrawals from one of its flagship private credit funds following a surge in redemption requests, as investors retreat from the asset class and questions about credit quality intensify...

The decision to cap withdrawals at 5 per cent will be closely scrutinised by the industry as outflows climb across semi-liquid private credit funds. The vehicles have drawn in hundreds of billions of dollars from retail investors and wealthy individuals who were enticed by the high returns on offer but have started to bolt at the first signs of stress.”

That news follows an unsettling recent pattern of private credit firms telling investors they cannot have their money back on demand, most notably Blue Owl last month, which also limited redemptions.

Normally the goings-on of the credit markets are of little interest to stock jockeys. But the concerns about credit have started to bleed into the stock market, too.

Of the S&P 500’s 11 industry groups — known as sectors — the financial sector (Financial Select Sector SPDR Fund) is by far the year’s worst performer, down more than 9% in 2026, with firms with links to private credit such as Ares Management, Blackstone, KKR & Co., and Apollo Global Management some of the worst performers. They’re all down more than 20% since the start of the year.

If investors were looking for another thing to worry about, this would likely be a good one to add to the list.

BlackRock limits redemptions at private credit fund as outflows swell

The Financial Times reported on Friday:

“BlackRock has limited withdrawals from one of its flagship private credit funds following a surge in redemption requests, as investors retreat from the asset class and questions about credit quality intensify...

The decision to cap withdrawals at 5 per cent will be closely scrutinised by the industry as outflows climb across semi-liquid private credit funds. The vehicles have drawn in hundreds of billions of dollars from retail investors and wealthy individuals who were enticed by the high returns on offer but have started to bolt at the first signs of stress.”

That news follows an unsettling recent pattern of private credit firms telling investors they cannot have their money back on demand, most notably Blue Owl last month, which also limited redemptions.

Normally the goings-on of the credit markets are of little interest to stock jockeys. But the concerns about credit have started to bleed into the stock market, too.

If investors were looking for another thing to worry about, this would likely be a good one to add to the list.

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