A slump of about $12.50 in Brent Crude sent airline shares climbing on Monday, with International Airlines Group adding 3.8% as the FTSE 100 recorded a fourth straight gain.

Cleared for take-off

When oil falls hard, airlines tend to rise, and Monday 2 November 2026 followed the script. International Consolidated Airlines Group (LSE:IAG) gained 3.8%, one of the best performances in a FTSE 100 that closed at 10,761.33, up 31.55 points or 0.3%.

The fuel side of the equation shifted sharply in a single day. Brent crude fell to $105.09 a barrel at the London close, down from $117.61 on Friday. By the US close, one report had Brent settling 7.63% lower at $104.77, while West Texas Intermediate fell 7.36% to $96.46, its biggest one-day drop since 27 July.

Travel stocks led the market. The FTSE 350 travel and leisure sector rose 2.7%, the top-performing sector on the day. Outside the FTSE 100, budget carrier Wizz Air climbed 5.2%. Reports on the session linked the rally in airlines and other consumer-facing names to lower oil, which cuts transport and fuel costs.

The oil slide had a political trigger. Reports said Washington and Tehran were considering renewed indirect negotiations, and Iran–Qatar diplomatic talks raised hopes of ending the US–Iran conflict. Iran was also reported to have offered to reopen the Strait of Hormuz under strict conditions.

Iranian Foreign Ministry spokesman Esmaeil Baghaei said "the ball is now in the US's court".

Risks remain, and they are not trivial. Iran's Revolutionary Guards said 11 tankers that they claimed were breaching navigational rules had caught fire in the Strait of Hormuz since 25 October. Monday's optimism rests on talks that have not yet produced a deal, and oil could swing back if they stall.

Fuel: IAG's biggest variable

The reason the market reacts so quickly is clear from IAG's own numbers. In its second-quarter update, covering the three months to 30 June 2026, the group said fuel costs had risen by nearly 25% in the quarter.

IAG also set out how it expects the year to look:

  • Full-year fuel bill guidance of up to €8.6bn, trimmed from €9bn
  • An expectation of recovering about 60% of higher fuel costs
  • 2026 capacity now flat

Second-quarter results showed the pressure. Adjusted operating profit came in at €1.41bn, down 16%, though ahead of the €1.38bn analysts had forecast. Revenue was €8.9bn, up 0.2%.

Illustration: IAG's lower fuel guidance is a reduction of €9bn − €8.6bn = €0.4bn, or €400m. As a share of the original figure, that is €0.4bn ÷ €9bn ≈ 4.4%. This is a comparison of two published guidance figures only; it is not a forecast of the final bill.

That guidance was issued at the end of July, before Monday's sharp drop in crude. Whether lower prices now feed through to the bill depends on factors not covered in the reports used here, so Friday's update will be the first real test. Hedging, timing and the pace of any recovery in ticket pricing are all unknowns from the outside, and the reports used here do not address them. What is clear is the direction of travel on Monday: cheaper crude, and a market quick to reward the companies that burn the most of it.

Beyond fuel, the second-quarter update showed a Business in steadier shape on the financial side. Net Debt fell by just over a fifth to €4.7bn. About €800m of a €1.5bn share buyback had been completed, leaving roughly €700m still to run at that point.

Shareholders also have a Dividend question pending, and it may prove as closely watched as the fuel line itself. IAG paid a 2025 total dividend of €0.098 per share, up 8.9%, and said guidance on the 2026 dividend would come with its third-quarter results on Friday 6 November. Chief executive Luis Gallego will be presenting those figures.

The wider FTSE 100 picture

IAG was part of a broad rally. JD Sports Fashion (LSE:JD.) led the FTSE 100 with a 4.76% gain, followed by Fresnillo (LSE:FRES) at 4.56%, St James's Place (LSE:STJ) at 4.52%, Weir Group (LSE:WEIR) at 4.23% and Kingfisher (LSE:KGF) at 4.21%. Construction and materials rose 2.8%, and consumer goods and services 2.5%.

The flip side was oil. Ithaca Energy (LSE:ITH) dropped 5.94%, BP (LSE:BP.) 4.37% and Shell (LSE:SHEL) 2.86%, as the energy sector fell 3.3%. Those heavyweights held back the index, which is why the FTSE 100's 0.3% gain trailed the FTSE 250's 1.4% surge to 24,795.85.

In Europe, the CAC 40 rose almost 1% and the Stoxx 600 reached a two-month high. On Wall Street at the London close, the Dow was up 1%, the S&P 500 0.6% and the Nasdaq 0.7%.

Currency matters for a group that reports in euros but trades in London. Sterling rose to $1.3417 from $1.3396 and stood at €1.1980.

The interest-rate backdrop adds another layer. The Bank of England decides on Thursday 5 November, with Bank Rate at 3.75% and a quarter-point rise to 4% priced at around 95%. The UK Manufacturing PMI hit a five-month high of 52.8 in October. A rate rise would be the first in more than three years, and its effect on UK consumer spending, including travel, will be a talking point for weeks to come.

Key dates to watch

  • Tuesday 3 November: US midterm elections
  • Thursday 5 November: Bank of England rate decision
  • Friday 6 November: IAG third-quarter results, including 2026 dividend guidance
  • Friday 6 November: US October payrolls
  • Thursday 12 November: UK GDP first quarterly estimate for July–September, 7:00am

The bottom line

IAG's 3.8% rise was a direct bet on cheaper fuel after Brent lost about $12.50 on hopes of US–Iran talks. With fuel costs up nearly 25% in the second quarter and a full-year bill guided at up to €8.6bn, oil is the single biggest swing Factor for the group. Friday's third-quarter results, complete with dividend guidance, will show how much of that pressure has been absorbed, and investors will be watching closely to see whether the numbers justify Monday's lift-off.