Oil Prices Fall to $70 After US-Iran Deal, but Airlines Keep Higher Fares and Bag Fees

Oil prices have fallen to about $70 a barrel after the US and Iran announced a preliminary agreement to end the nearly four-month war that closed the Strait of Hormuz. The conflict began when the US and Israel launched operations in late February. Business Insider reported that average domestic airfares have risen about 8% and international fares about 18% since the war started.

Fares from the US to Amsterdam and London increased by more than $200 roundtrip, according to KAYAK data. US airlines raised checked bag fees by as much as $50 one-way, with most major carriers now charging $40 to $50 per bag each way. The carriers collected roughly $5.5 billion in bag-fee revenue in 2025, Bureau of Transportation Statistics data showed.

Airline stocks have advanced as investors anticipate sustained high fares alongside lower fuel costs. Delta Air Lines shares rose above $90, exceeding the pre-war high of about $75 in early February. United Airlines traded at about $134 on Thursday, up from roughly $117 before the conflict, while American Airlines shares reached about $17.

The Trump administration signed an agreement in mid-June extending the ceasefire for 60 days. The latest deal was signed last week. President Donald Trump warned Tuesday that acquisition of a nuclear weapon by Iran would bring severe consequences.

Southwest CEO Bob Jordan said in May that the carrier and its competitors would not reverse recent fare increases. United CEO Scott Kirby stated in early June that he lacked confidence any reopening of the Strait of Hormuz would endure. Spirit Airlines collapsed in May, removing additional low-cost seats from the market.

Aviation analysts cited by Business Insider said tight capacity and resilient demand give carriers little reason to lower prices or bag fees even if oil remains near current levels.