United Airlines (NASDAQ:UAL) stumbled today as rising oil prices eat into investor confidence. Indeed, UAL stock dropped 9% Friday, joining a number of travel and auto stocks on the decline.
So what is going on with United right now?
Well, the Russian-Ukraine conflict continues to create global supply chain disruptions. As oil prices surpass 10-year highs, a number of industries have been falling on expectations of higher costs. Airlines are one such industry, and United was an unfortunate victim today of the bearish wave.
Russia is one of the largest producers of natural gas and oil in the world. As such, its ongoing invasion of Ukraine, and the subsequent sanctions levied against it, have brought supply shocks putting upward pressure on gas and oil.
Indeed, the price of Brent crude reached over $110 per barrel this week for the first time in 10 years. It seems rising oil prices are primarily behind the dip in United today.
UAL Stock Stuck in the Red as Oil Prices Skyrocket
Jet fuel is one of the largest costs airlines have, right behind labor. The prospect of increasing supply costs presents a clear bearish signal to many investors. As such, United’s recent struggles are perhaps unsurprising.
United joins the likes of Delta Air Lines (NYSE:DAL), American Airlines (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV) in a brutal pullback Friday. It’s unclear when or how the current supply concerns will ease. However, rest assured investors will continue to keep their eyes on the skies.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
