Biofuels Gain as Brent Crude Tops $109 on Iran War Fallout

Soaring oil prices driven by the US-Israel war on Iran are forcing a strategic pivot to biofuels, rewarding investors who anticipated the energy shift.

The protracted US-Israel war on Iran has pushed Brent crude oil past $109 a barrel, a surge of nearly 40 percent since the conflict began, creating a powerful tailwind for biofuel producers as industries scramble for fossil fuel alternatives.

"Trump is feeling the economic pinch, which is his Achilles heel in this war of choice,” said Brett Bruen, a former foreign policy adviser in the Obama administration who heads the Global Situation Room strategic consultancy.

Benchmark Brent Crude futures climbed from around $79 per barrel before the war to over $109 on April 2nd, before settling near $96.25 more recently. The spike has inflicted broad economic pain, with air freight costs for specialized goods like fine art jumping as much as 300 percent, according to Wang Jianmin, founder of Top Space Art Service. The airline industry has seen 19 of the world's 20 largest carriers cut capacity for May in response to jet fuel prices that have doubled to almost $200 a barrel.

The sustained high prices and supply chain disruptions, stemming from Iran's effective closure of the Strait of Hormuz, are accelerating a structural shift toward energy independence. This is creating significant bullish momentum for the alternative energy sector, particularly biofuel producers whose products become more cost-competitive as oil prices rise. The market is now pricing in a prolonged period of geopolitical risk, benefiting companies positioned for the green transition.

Oil Price Surge Creates Cross-Sector Strain

The economic consequences of the oil shock are rippling through global supply chains. The art world, a niche but telling indicator of logistics stress, has seen shipments grounded and exhibition plans curtailed. A Per Kirkeby exhibition at China's He Art Museum went ahead with fewer works after a portion of the show was stuck at Doha International Airport. "We’ve had plenty of logistical hurdles over the years, but this is the strangest for us—to have an entire exhibition physically stuck,” said Gordon VeneKlasen, founder of the VeneKlasen gallery.

Airlines have been hit particularly hard. United Airlines CEO Scott Kirby announced flight cuts, noting that sustained high prices would add an extra $11 billion in annual fuel expenses. European carriers like Ryanair and Germany's Lufthansa are also reducing routes, with the latter retiring aircraft ahead of schedule due to the dual pressures of fuel costs and labor disputes. Asian carriers, including Vietnam Airlines and AirAsia, have slashed flight volumes by 10 to 20 percent.

Biofuel and Industrial Stocks Gain Momentum

Amid the fossil fuel turmoil, investors are rotating into companies that benefit from the transition to alternative energy and materials. Biofuel giant Archer-Daniels-Midland (ADM) has seen its stock gain 13.53 percent year-to-date, with its 1-year total shareholder return hitting 45.14 percent. Favorable government policy, including the extension of the 45Z tax credit for biofuels, is expected to drive soybean oil demand and support ADM's margins into 2026. While some analysts see the stock as modestly overvalued with a fair value of $63.82 against a recent price of $67.04, a discounted cash flow (DCF) model from Simply Wall St suggests a much higher intrinsic value of $94.74.

The momentum extends to related industrial and aerospace sectors. Kaiser Aluminum (KALU), a key supplier for lightweighting in transport, has seen its shares jump 38.6 percent over the past four weeks. The stock holds a Zacks Rank #2 (Buy) and trades at a relatively inexpensive 0.71 times sales. Similarly, Rolls-Royce Holdings PLC (RYCEY), a major aerospace engine manufacturer invested in sustainable aviation fuels, is up 85.95 percent in the last year, far outpacing the S&P 500's 36.46 percent gain. The stock also carries a Zacks Rank #2 (Buy), with analysts revising full-year consensus estimates upward from $0.45 to $0.49 over the past 60 days.

This article is for informational purposes only and does not constitute investment advice.