Airline Shares Dive as Crude Soars Following Trump-Ordered Drone Strike Killing Key Iranian General

Surging crude prices and the prospect of travel bans in and around the Gulf region following the U.S. killing of a key Iranian military commander has airline shares in a tailspin Friday.

U.S. airline stocks traded sharply lower Friday as investors reacted to the killing of a key Iranian military commander by a drone strike ordered by President Donald Trump.

Major-General Qassem Soleimani, who lead the Quds Force of Iran's Revolutionary Guards, was killed Thursday by a strike that was directly ordered by President Donald Trump, according to a Pentagon statement, following an attack on the U.S. embassy in Baghdad by suspected Iranian militants earlier this week. 

Iran's supreme leader, Ayatollah Ali Khamenei, vowed to seek revenge on American targets with the help of allies around the Muslim world, sparking concerns for potential supply disruptions and reprisal attacks on tankers and facilities in the Gulf region. 

With global crude prices -- the biggest cost input for most domestic and international carries -- surging more than 4% in overnight trading, and the U.S. State Department issuing a security warning for American citizens in Iraq, shares in carriers from Frankfurt to Los Angeles are trading firmly in negative territory. 

American Airlines Group  (AAL) - Get Report shares were marked 3% lower in early trading to change hands at $28.21 each. Domestic rival Delta Airlines  (DAL) - Get Report was seen 2.8% lower at $57.40 each while Southwest Airlines  (LUV) - Get Report was trading 2.3% lower at $53.60 each.

In European trading, Germany's Deutsche Lufthansa plunged more than 7%, leading the benchmark DAX performance index to a 1.5% decline, while regional airline Air France KLM and British Airways parent IAG fell 6.3% and 1.9% respectively.

Brent crude futures contracts for February delivery, the global benchmark for pricing, were last see seen $2.45 cents, or 3.6% higher from their Thursday close in New York and trading at $68.70 per barrel, the highest level since the days following September's missile strike on a Saudi Aramco tanker in the Strait of Hormuz, which were largely accepted to have been carried out by Iran.

WTI contracts for the same month, which are more tightly-linked to U.S gasoline prices, were marked $2.21, or 3.63% higher at $63.39 per barrel.