Shares in British Airways owner International Consolidated Airlines Group (LSE:IAG) and engine maker Rolls-Royce Holdings PLC (LSE:RR.) fell at the start of the week as a sharp rise in oil prices hit travel and aerospace stocks.
Airlines were among the worst performers on the FTSE 350, with IAG leading the blue-chip decline, down around 2.7% in early trading.
Wizz Air Holdings PLC (AIM:WIZZ) led the mid-cap fallers, sliding 7%, while easyJet PLC (LSE:EZJ) dropped 4.2%.
Rolls-Royce was also under pressure, dropping almost 2%, as investors reacted to the likelihood of reduced airline flying hours and engine servicing demand, its key drivers of revenues.
The move followed a surge in crude prices, with Brent jumping 7% to around $102 a barrel after talks between the US and Iran broke down.
Higher oil prices tend to weigh on airlines, as fuel is one of their largest operating costs, squeezing margins and raising uncertainty over profitability.
The broader market was weaker after Donald Trump said overnight that the weekend negotiations between the US and Iran “went well” on most points, but there was one major sticking point: “Iran is unwilling to give up its nuclear ambitions”.
He has threatened a blockade of all vessels in the Strait of Hormuz from 3pm London time (10am US Eastern Time) today.