American Airlines Group Inc. (NASDAQ:AAL) stock is trading higher on Monday morning. The rally comes on the heels of a major geopolitical breakthrough in the Middle East that is directly shifting energy market dynamics.

Oil Plunges On U.S.-Iran Peace Deal

The primary catalyst behind the surge in airline equities is a sharp decline in energy costs. Crude oil plunged more than 5% on Monday to around $80 per barrel, touching a two-month low.

Reopening Of The Strait Of Hormuz

According to draft details reported by Reuters, the memorandum of understanding (MOU) requires Iran to reopen the waterway to commercial vessels immediately. At the same time, the U.S. lifts its naval blockade within 30 days.

Broader Market Conditions Support Equities

A favorable macroeconomic backdrop is further supporting AAL's Monday gains.

U.S. stock futures advanced broadly, with the Nasdaq 100, S&P 500, and Dow Jones Industrial Average tracking higher following Friday's positive close.

Critical AAL Price Levels To Watch

AAL is extended above its key trend gauges, trading 13.2% above the 20-day SMA ($13.78) and 19.1% above the 200-day SMA ($13.09), which keeps the intermediate trend pointed up even if it gets choppy near resistance. It's also 22.8% above the 50-day SMA ($12.70) and 23% above the 100-day SMA ($12.67), a sign the rally has been strong enough to separate price from the moving-average magnet.

The moving-average structure is mixed under the hood: the 20-day SMA is above the 50-day SMA (bullish), but the 50-day SMA remains below the 200-day SMA after the death cross in March.

AAL Price Action: American Airlines Group shares were up 5.51% at $15.80 at the time of publication on Monday, according to Benzinga Pro data.

Photo by Wenjie Zheng via Shutterstock