Wizz Air Issues Profits Warning Due to Middle East Crisis
The ongoing conflict in the Middle East, coupled with rising oil prices and the depreciation of the euro linked to the Iran war, has led low-cost carrier Wizz Air to issue a profits warning.
Last night, Wizz Air informed investors that it anticipates the current Middle East crisis will reduce its profits by €50 million for the financial year.
Previously, the airline forecasted earnings between a profit of €25 million and a loss of €25 million; this updated warning indicates an expected loss for the year.
"In terms of the expected impact, approximately one third is a result of the cessation of certain scheduled services to the Middle East, with the remainder from the adverse movement in macroeconomic factors as a result of the Iran conflict.
Our assessment of the impact of these macroeconomic factors is based on jet fuel and US$/€ rates as of today, and assumes that these rates will remain at current levels for rest of Fiscal Year 2026."
Gas Prices Rise Again
Gas prices have increased this morning, posing risks of higher inflation and pressure on living standards.
The month-ahead UK gas price rose by 6.5% to 135p per therm, reversing much of the decline seen yesterday and nearly doubling the lows recorded in mid-February.
European gas prices also climbed by 7%, reaching €52 per megawatt hour.
Susannah Streeter, chief investment strategist at Wealth Club, stated:
"The heat has turned up under gas prices again, with the global rally taking off once more. The world’s largest LNG export plant in Qatar remains out of action and the key supply route from the Gulf is disrupted. The surge in gas prices is already being felt by energy customers in the UK, with big providers pulling some of the cheaper fixed-price deals."
Household budgets may face additional strain as expectations for interest rate cuts diminish. Elevated energy costs are likely to sustain headline inflation, causing central bankers to remain cautious about reducing rates.
European stock markets declined in early trading, as gains in Asia-Pacific markets did not extend to Europe.
The pan-European Stoxx 600 index fell by 0.3%, with losses in Frankfurt, Paris, Milan, Madrid, and London.
The UK’s FTSE 100 index dropped 20 points, or 0.19%, influenced by declines in airline shares this morning. Some mining stocks also weakened.
The British pound weakened against the US dollar, erasing yesterday’s modest recovery.
Sterling declined by more than half a cent to $1.331, while the dollar strengthened against a basket of currencies.
Crude Oil Rises After Iran Missile Strike on US Tanker
Iran’s semi-official Tasnim news agency reported that a US oil tanker in the northern Persian Gulf was struck by a missile launched by Iranian forces.
"The tanker was struck this morning in the northern Persian Gulf by forces of the Islamic Revolutionary Guard Corps and is currently on fire."
Brent crude oil prices increased by 3.3% today, reaching $84 per barrel.
Bloomberg’s Javier Blas provided further information:
This is a significant escalation:@UK_MTO reports an oil tanker that was on anchor offshore Kuwait (and near Iraq too) has been hit by an explosion; oil is spilling and the tanker is tanking on water."... There is oil in the water coming from a cargo tank..." pic.twitter.com/zr5Tu7X8LH
Update: The representative of the oil tanker, the Sonangol Namibe, stated that a ballast tank was hit and there is a hull breach, but no indication of an oil leak. The ship was anchored, in ballast with no cargo. This is considered positive news under the circumstances.
Airline Shares Fall in London, Led by Wizz Air
Wizz Air shares declined by 6% at the start of trading following the profit warning.
Other airline stocks also fell amid concerns that rising oil prices will increase operational costs. IAG, the parent company of British Airways, dropped 2.6%, while easyJet shares lost 2.9%.
Warning: War Could Disrupt Semiconductor Production
A South Korean ruling party lawmaker warned on Thursday that the US-Israel conflict with Iran could disrupt supplies of critical semiconductor manufacturing materials.
South Korea’s chip industry, which supplies approximately two-thirds of global memory chips, is concerned that a prolonged conflict could lead to higher energy costs and prices, according to Kim Young-bae after discussions with executives from Samsung Electronics and trade organizations.
"Officials raised a possibility that semiconductor production could be disrupted if some of these key materials cannot be sourced from the Middle East,"
Kim added that South Korean companies source certain essential chip-making materials, such as helium, from the Middle East.
Further details are available in our Middle East crisis liveblog.
Oil Prices Up 2.75% This Morning
Oil prices continued to rise this morning, with Brent crude increasing by 2.75% to $83.68 per barrel, nearing the 19-month high reached on Monday.
Deutsche Bank analysts attributed the rise to the absence of de-escalation signs in the Middle East conflict, advising clients:
"That comes as the IRGC said they would intensify and expand strikes in the coming days, while the US confirmed it had sunk an Iranian warship in the Indian Ocean near Sri Lanka.
There was also little clarity over the war’s potential length, with US Defense Secretary Pete Hegseth saying ‘it could be six, it could be eight, it could be three’ weeks. There’s also uncertainty on when shipping will resume through the Strait of Hormuz, and we’ve seen signs of oil importers beginning to adjust behaviour."
For instance, Bloomberg reported overnight that China instructed its largest oil refiners to suspend exports of diesel and gasoline.
Bloomberg: China Tells Top Refiners to Halt Diesel and Gasoline Exports
Bloomberg reported that China’s government has directed the country’s largest oil refiners to temporarily suspend diesel and gasoline exports due to disruptions in crude oil supplies.
This development indicates that the slowdown in oil shipments from the Middle East this week is beginning to affect Asia-Pacific economies.
"Officials from the National Development and Reform Commission, the country’s top economic planner, met refinery executives and verbally called for a temporary suspension of refined product shipments that would begin immediately, according to people familiar with the matter.
The refiners were asked to stop signing new contracts and to negotiate the cancellation of already-agreed shipments."
Introduction: Asian Shares Surge, Led by South Korea's KOSPI
Good morning, and welcome to our continuous coverage of business, financial markets, and the global economy.
The Middle East conflict remains a dominant influence on markets. After significant losses earlier this week, Asia-Pacific stocks have rebounded today.
MSCI’s broadest index of Asia-Pacific shares excluding Japan rose by 3.9%. South Korea’s KOSPI, which experienced its largest-ever drop on Tuesday (-12%), surged nearly 10% today. Japan’s Nikkei increased by 1.9%.
Markets appear calmer and more optimistic, according to Michael Brown, senior research strategist at Pepperstone.
"That news flow has leaned net positive over the last day or so, although kinetic action continues in the Middle East, not only with President Trump having touted insurance guarantees, and potential navy escorts for tankers in the Strait of Hormuz, but also amid reporting (which was later denied) that Iran had reached out to the US via various back-channels to engage in discussions regarding an end to the war."
Airline shares are among the gainers as flight operations resume in the Middle East. Hong Kong’s Cathay Pacific Airways rose 1.34% in late trading, while Australia’s Qantas Airways gained 1%.
The Agenda
- 9am GMT: UK car sales for February
- 9.30am GMT: UK construction PMI for February
- 1.30pm GMT: US initial jobless claims
