Airline stocks such as Delta Airlines and United Airlines Holdings are trading higher Tuesday following a sharp decline in oil prices and growing hopes for a ceasefire between Iran and Israel.

What To Know: The gains come as Brent crude and other oil benchmarks fell sharply.

The United States Brent Oil Fund (BNO) dropped over 5%; the United States Oil Fund (USO) dropped a similar amount. The selloff in energy markets was driven by President Donald Trump's announcement of a tentative ceasefire between Israel and Iran. If the truce holds, it could reduce the risk of further escalation in the oil-rich Middle East region.

Iran's foreign ministry disputed the existence of a formal agreement. Yet, it also indicated a willingness to halt operations if Israel stops its attacks. Despite the uncertainty, markets are reacting to the possibility that immediate conflict may subside. A resolution could stabilize oil flow through the Strait of Hormuz, a key passage for global crude shipments.

The resulting drop in jet fuel and broader oil prices is potentially seen as a positive development for the airline sector, which is highly sensitive to fuel costs. Additionally, the reduced geopolitical risk may ease concerns around travel demand in international markets. However, with Israel accusing Iran of violating the ceasefire on Tuesday, the situation remains fluid and volatile.

Price Action: Delta shares were up 2.59% at $49.50 and United Arline shares were 2.72% at $79.06 at the time of writing, according to Benzinga Pro.

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