EL7.AI
StocksMedium•3 November 2026•
4 min read

Brent’s 8.17% Drop Lifts Qantas and Virgin Australia Shares

Key Facts

1Brent fell 8.17% to $104.13 a barrel, and WTI declined 7.81% to $95.96 in the morning update on Nov. 3.
2Fuel accounted for 21% of Virgin Australia’s operating expenses in the first half of fiscal 2026, at a cost of A$554.7 million.
3The competition commission forecast Qantas fuel costs of about A$3.6 billion, up about 40%, and Virgin fuel costs of about A$700 million, up 26%, in the first half of fiscal 2026-27.
4Australia’s consumer price index was 104.34 in September 2026, up 0.8% from the previous period and 4.3% year over year.

Shares in Qantas and Virgin Australia rose as oil prices fell in Tuesday’s session, Nov. 3, after Brent crude dropped 8.17% to $104.13 a barrel and West Texas Intermediate fell 7.81% to $95.96, according to the Australian market update published by Capital Brief at 7:40 a.m. Sydney time. Crude fell amid signs that the United States and Iran were prepared for diplomatic talks to end the conflict, according to the same coverage. Reuters had linked the previous day’s oil decline to Iranian-Qatari talks that continued for a third day, seeking an agreement to end the US-Israeli war on Iran and ease supply concerns. By 12:24 p.m. Eastern time on Monday, Nov. 2, Brent was down 7.47% at $104.96 a barrel and WTI was down 7.2% at $96.62, according to Reuters via StreetInsider. In early Asian trading on Tuesday, oil prices steadied after the previous session’s decline, while Australian shares rose 0.1% ahead of the central bank update, according to Reuters via Investing.com.

The decline in crude is a significant factor for airlines because fuel is a major expense, but it does not mean an immediate, equivalent drop in actual costs. Virgin Australia said fuel accounted for 21% of its operating expenses in the first half of fiscal 2026, costing A$554.7 million, with consumption equivalent to 3.4 million barrels of oil. The company also disclosed on April 15 that it had hedged 92% of Brent crude and 71% of refining margins for the remainder of the second half of fiscal 2026. At the time, it estimated that fuel costs for that period would rise by about A$30 million to A$40 million compared with its previous forecast. These figures show that crude prices interact with hedging and refining margins, so a fall in oil alone does not translate into immediate disclosed savings for the carrier.

The two airlines face costs above previous levels despite continued demand. The Australian Competition and Consumer Commission said jet fuel prices in late August were about 50% higher than in February 2026, while Qantas and Virgin Australia’s operating profits remained strong during fiscal 2025-26. The commission attributed the performance to resilient passenger demand, higher fares and capacity adjustments, as well as arrangements that fixed some fuel costs in advance. At the same time, both companies forecast that costs would remain high as they made further capacity cuts. The commission estimated Qantas Group’s fuel costs at about A$3.6 billion in the first half of fiscal 2026-27, up about 40% from the year-earlier period, while it estimated Virgin’s costs at about A$700 million, up 26%.

Refining margins remain a key source of exposure alongside crude oil prices. Qantas said in an April disclosure that jet fuel prices had more than doubled since its previous forecast update and that it had hedged about 90% of its crude oil exposure in the second half of fiscal 2026. But it said it remained largely exposed to movements in jet fuel refining margins. This means that crude price moves, even sharp ones, alone do not capture the full trajectory of airlines’ fuel costs. The Brent decline recorded in Tuesday’s update does not establish the amount of any actual or expected improvement in Qantas’ or Virgin’s expenses.

Australian share movements coincided with investors awaiting an update from the Reserve Bank of Australia, while inflation remained elevated. Australian Bureau of Statistics data showed the consumer price index at 104.34 in September 2026, up 0.8% from the previous period and 4.3% year over year; Oct. 28 was the release date for the September data, not the date of the index reading. The bank said the prevailing cash rate was 4.60% as of Sept. 30 and that its next update was scheduled for Nov. 3 at 2:30 p.m. Sydney time. No official announcement in the available evidence confirmed a new rate increase that day. The next monetary policy decision is scheduled for Dec. 8 at 2:30 p.m. Sydney time.

An upcoming economic release is Australia’s October consumer price index data, scheduled for Nov. 25, 2026, according to the statistics bureau’s calendar. It will come ahead of the central bank’s December meeting, while US-Iran peace talks remain a factor monitored by markets after signs of renewed diplomatic efforts were linked to the oil decline. The Associated Press said oil prices fell sharply on Monday as signs emerged of progress in renewed diplomatic efforts over the war. It also reported Iranian officials’ announcement that they were prepared for war or diplomacy, leaving a settlement unresolved. The two companies’ projected fuel costs remain high in the first half of fiscal 2026-27, according to the competition commission’s estimates, despite the sharp decline in crude.