International consolidated airlines (LSE:IAG) is one of the most volatile FTSE100 shares now. It is changing rapidly in response to fluctuations in oil prices, which are themselves a consequence of events in the Middle East.

At 396.1p per share, IAG’s share price has risen after falling at the start of the Iran war. However, it remains 6.3% lower than before the outbreak of the conflict. And I fear the owner of British Airways may slip again…

Rising costs

Airlines are among the groups most at risk during the crisis in the Middle East. With oil prices skyrocketing due to supply disruptions, these companies are facing soaring costs. Fuel accounts for about a quarter of operating costs.

Jet fuel prices have more than doubled since the beginning of the conflict and were last at around $1,530 per tonne. This is even more of a problem as many long-haul routes cover longer distances, bypassing parts of Middle Eastern airspace.

But it’s not just higher costs that IAG has to worry about. It also faces the prospect of not having enough fuel to get its planes off the ground. On Friday (10 April), the Airports Council International (ACI Europe) told the EU that shortages could occur within three weeks if the Strait of Hormuz remains closed. This according to Financial Times..

Are there other threats?

The longer the conflict lasts, the greater this risk becomes. But this creates another huge problem – more route disruptions as key destinations in the Middle East are avoided.

In recent weeks, flights between Amman, Abu Dhabi, Bahrain, Doha, Dubai and Tel Aviv have been affected. And although IAG plans to resume some work in the next few weeks, the escalation of the conflict may thwart these plans.

He has already been warned against “further changes to our flight schedule” on Friday, announcing plans to reduce the number of flights to Doha, Dubai, Riyadh and Tel Aviv from pre-war levels.

Is IAG stock worth buying?

Add to that the impact of the war on broader inflation and economic growth, and I think things could be very arduous for IAG and its shares. The holidays are one of the first things consumers come back to when they feel the pinch. This could potentially prompt the company to lower its earnings forecast, which will have a knock-on effect on the share price.

However, it is worth noting that the popularity of brands such as British Airways could assist IAG overtake the wider sector. For low-cost airlines, Aer Lingus and Vueling could also benefit if cash-strapped customers switch from premium and mid-tier operators.

However, in my opinion, the risk of owning IAG shares is too high in the current situation. Especially when you consider that fierce competition also puts enormous pressure on a company’s sales and profit margins. Overall, this is a FTSE 100 stock to avoid.