The unrest in the Middle East is having a major impact on the financial markets. Share prices of airlines are plummeting. Conversely, the oil price, and thus the price of kerosene, is rising sharply. Oil tankers are paralyzed, and one of the world's largest refineries has been shut down.

Because airlines cannot fly to much of the Middle East, they are out of favor with investors. The share price of Air France-KLM fell more than 7 percent. IAG, the owner of British Airways and Iberia, and easyJet fell 7 and 4 percent in London, respectively. In Frankfurt, Lufthansa lost 6 percent.

Asian airlines and Qantas also fell sharply in value. Qantas dropped more than 10 percent at the opening and closed at minus 5 percent. Japan's ANA Holdings, Air China, China Southern Airlines, China Eastern Airlines, Malaysia's AirAsia X, and Taiwanese airlines China Airlines and EVA Airways all fell at least 4 percent. According to experts, the cause is higher fuel costs, flight cancellations, and higher costs due to rerouting. Delta and American have fallen about 6 percent since Friday while the New York stock exchange is still closed. The UAE stock exchanges will remain closed on Monday and Tuesday.

Oil prices soared due to the unrest in the oil-rich Middle East. A barrel of American crude cost 9 percent more, to $73.05, and Brent crude rose almost 10 percent, to $80. The price of jet fuel is highly dependent on oil prices. Petrobras raised its price by more than 9 percent, Reuters reported last Friday. The market was thus anticipating the outbreak of violence over the weekend.

More than 200 ships, including oil and liquefied gas tankers, dropped anchor outside the strait on Sunday, according to shipping data. Three tankers were damaged and one seafarer was killed in attacks on Sunday in the Gulf waters.

Saudi Arabia's state-owned oil company Saudi Aramco shut down its major Ras Tanura oil refinery Monday morning after a drone attack caused a small fire at the complex. Authorities say this was a precautionary measure: there was no major damage to the refinery and no injuries were
reported.

The Saudi Ministry of Defense says two drones were intercepted at the refinery and that the fire was caused by debris from those drones. Ras Tanura is located in the Persian Gulf and is one of the world's largest refineries, with a production capacity of 550,000 barrels of oil (159 liters) per day.

Investors' attention is now focused primarily on the duration of the conflict in the Middle East. A prolonged conflict is expected to lead to a further sharp rise in fuel prices. Iran, which on Monday launched attacks on the Gulf region and Israel for the third day in a row in retaliation for the US-Israeli offensive, has indicated it does not want to negotiate with the United States.

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* Origin: AVIATION ECHO HQ (2:292/854)