(Adds missing word "be" in paragraph 1)

By Nandan Mandayam and Anshuman Tripathy

June 24 (Reuters) - U.S. airline stocks rose 3% to 7% on Wednesday after crude prices fell to their lowest since before the Iran war, raising hopes that pressure on carriers' earnings could ease, though the benefits are unlikely to be passed on to passengers immediately.

The S&P 500 Passenger Airlines index jumped as much as 5% to an all-time high, and is up nearly 13% since its close on June 12, after which the U.S. and Iran announced a peace agreement. The benchmark S&P 500 has dropped 0.5% in that time.

Brent crude futures fell below the $74-a-barrel mark on Wednesday amid signs that more oil tankers are set to move out of the Strait of Hormuz, a conduit for a fifth of the world's oil supplies. [O/R]

With crude supplies and prices set to ease, airlines stand to save billions of dollars in additional costs as the run-up in jet fuel prices during the Iran war had outpaced fare growth. However, an immediate decline in fares for flyers remains unlikely amid tight capacity.

The retreat in oil coupled with resilient demand is driving airline stocks higher, UBS analyst Atul Maheswari said.

The brokerage said in a note on Tuesday that it sees potential for airlines' third-quarter earnings per share to outperform Wall Street expectations, if fuel prices moderate.

Also, while all carriers are expected to benefit from cheaper jet fuel, analysts say those with smaller fleets and a lower share of premium seats and customers are likely to gain more, as their margins are more sensitive fuel-price spikes.

Frontier and Southwest ( LUV ) rose 3% each, while Delta and JetBlue rose 3.7% and 4.5%, respectively. Alaska Air ( ALK ) and United were up about 6% each, while American Airlines ( AAL ) surged about 7% in early trading.

Jet fuel prices, which averaged about $85 to $90 a barrel before U.S.-Israeli strikes on Iran in February, had retreated from a peak of over $170 to an average $119.17 in the week to June 19, according to the International Air Transport Association.