Is a Short Squeeze Brewing in This Hard-Hit Airline Stock Amid Iran War?

Airline stocks are hurting badly as the Iran overhaul has pushed crude oil prices near the $100/barrel mark. Last week, we were already experiencing the high costs of fuel and travel disruptions caused by U.S. carriers. On March 12, the price of oil rose 7% following tanker attacks in the Red Sea, which led to declines in airline stocks. American Airlines Group (AAL) and its competitors plummeted ahead of Thursday's trading, raising concerns about another turbulent period. Such issues contributed to the airline's vulnerability in the recent past: most U.S. airlines reduced capacity and raised fares late in 2025, thereby straining demand. Today, brokerages fear profit squeezes as the Iran tensions and increased oil prices are on the rise. 

In this scenario, where AAL is facing high short interest, according to the latest data, approximately 7.7% of its float, traders are questioning: could there be a short squeeze in case the stock turns around as the price of fuel returns to normal? It preconditions a pullback in a bearish mood against any rally driver.