The surging price of oil as a result of the Iran war could be leading airlines to once again embrace sustainable aviation fuel (SAF) to ensure millions of people don’t miss out on their holidays this summer.
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Fuel Price Warnings
The attack by Israel and the U.S. on Iran in late February, which has led to attacks on energy facilities in the Middle East and the closure of the Strait of Hormuz has seen the Brent Crude oil price climb 67% in the last three months to around $115 currently.
This has put pressure on consumers at the gas pump but also businesses from logistics to airlines. In the latter, major flyers have warned about the impact on jet fuel costs, with United Airlines (UAL) getting set for a $11 billion hit in annual fuel costs.
It has raised fears among travellers that airlines may cut routes this summer to avoid costs hitting holiday hopes. Indeed, Air India has said it is cutting international trips to at least July.
What this could mean is a revival in demand for Sustainable Aviation Fuels, which are non-fossil fuel based and made from renewable sources or feedstocks. Although still more expensive than traditional fuel, by around two to five times, that differential has dropped since the conflict began.
According to one energy banker speaking to Reuters, a significant chunk of investment will now flow into existing companies and startups focused on ways to bring down the price premium of biofuels.
So what stocks could benefit? We’ve selected stocks from our SAF refinery comparison page and SAF stocks comparison page.
Aemetis (AMTX)
It operates as a renewable natural gas and renewable fuels company in North America and India. It operates through three segments: California Ethanol, Dairy Renewable Natural Gas, and India Biodiesel. The company focuses on the acquisition, development, and commercialization of negative carbon intensity products and technologies that replace traditional petroleum-based products.
Its stock is up 103% over the last three months. It has a Moderate Buy consensus based on 2 analyst ratings in the last three months. AMTX stock’s consensus is $24.50, implying a 591.11% upside.
Gevo (GEVO)
Gevo is a renewable fuels company. It operates through four segments: Gevo, Agri-Energy, Renewable Natural Gas, and Net-Zero. The company commercializes gasoline, jet fuel, and diesel fuel to achieve zero carbon emissions, and reduce greenhouse gas emissions with sustainable alternatives.
Its share price is up 10% over the last three months. It has a Moderate Buy consensus based on 2 analyst ratings in the last three months. Its consensus target price is $8.75, implying a 326.83% upside.
Valero Energy (VLO)
It manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments: Refining, Renewable Diesel, and Ethanol.
Its stock is up 25% over the last three months. It has a Moderate Buy consensus based on 9 Buy, 6 Hold and 1 Sell ratings. Its consensus price target is $260.40, implying a 5% upside.
