Investing.com -- Shares of Australia’s Qantas Airways surged more than 5% on Monday, reaching a one-month high. This increase was in response to a decline in oil prices following a signal from OPEC+ about potential faster output hikes.

Oil prices experienced a drop of over $2 a barrel after OPEC+ decided to increase output for a second consecutive month. This decision came despite falling prices and expectations of weakening demand.

Jet fuel, a significant cost for airlines, becomes less expensive when oil prices fall. This reduction could lead to increased profitability for airlines. In fiscal 2024, Qantas spent A$5.32 billion ($3.44 billion) on fuel, marking an increase of nearly 17% from the previous year.

Tim Waterer, chief market analyst at brokerage KCM Trade, noted that investors anticipate that weaker energy prices could boost the airline’s profits.

The decrease in fuel costs provides some relief for Qantas as it faces stiff competition from Virgin Australia. Virgin Australia is preparing for an initial public offering later this year.

As of the end of December, Qantas and its budget subsidiary Jetstar controlled about 65% of Australia’s domestic market. In contrast, Virgin held a 35% share, according to data from Australia’s competition regulator.

Qantas shares ended the day with a modest 0.8% increase, after previously reaching a 5-week high.

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