IAG Share Price Prediction: Cautious Optimism As Stock Recovers Some Ground

Summary:
• Rising geopolitical risk in the Middle East and rising oil prices have brought headwinds to IAG share price, but it has some cushion.

International Consolidated Airlines Group (IAG) share price traded flat in the Wednesday afternoon trading session, with the stock at GBX 196. The stock has been on a recovery mode this week following last week’s steep decline that sent it down by 9.5 percent to snap a ten-week winning streak.

The airline conglomerate, which owns multiple airlines like British Airways, Aer Lingus, Iberia, Vueling, and IAG Cargo, has encountered headwinds in its cost and revenue fronts in recent days. Iran’s attack on Israel last week raised the prospect of a regional war in the Middle East. As Israel mulls a response, an escalation of the war could disrupt air travel, including through airspace closures and flight cancellations.

Also, the tension has added geopolitical premium on global oil prices. Benchmark Brent crude price rose by 8.5 percent last week while West Texas Intermediate (WTI) went up by 9 percent. IAG share price gains this year have been influenced significantly by lower oil prices. Therefore continued rise in the commodity’s price could increase IAG’s operation costs and eat into its margins.

However, despite the headwinds in the Middle East, IAG (LSE: IAG) has a diverse market, with destinations spread across the world. Also, the conglomerate has hedged its fuel purchases and only buys 24 percent of the product at live prices this quarter. These measures could help cushion it against the drawdown brought by the war rhetoric.

IAG share price

The momentum on IAG share price signals bullish control above 194.70. With the buyers in control, the stock could continue with the upside and encounter the first resistance at 197.45. If the bullishness strengthens, that mark could become a support, with further gains driving the price to test 199.35.

Conversely, a move below 194.70 will signal bearish control. In that case, the price could slide to find the first support at 192.60. However a stronger bearish momentum could breach that level to invalidate the upside narrative and potentially test 189.90.