All Eyes on Oil! FedEx (FDX) to Report Q3 Earnings amid Middle East Shipping Risks

FedEx FDX -0.41% ▼ is set to report its Q3 earnings on March 19, and investors are closely watching oil prices, as ongoing Middle East tensions continue to disrupt shipments. Fuel is one of FedEx’s most volatile operating costs, so the recent jump in oil prices tied to the Iran conflict could put pressure on results. Overall, the market will be watching closely to see how higher fuel costs affect FedEx’s margins and whether management expects ongoing geopolitical tensions to put pressure on profits in the coming quarters.

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For context, FedEx is a global logistics and transportation company that provides express shipping, freight services, and supply chain solutions to businesses and consumers worldwide.

All Eyes Are on Oil

Evercore transportation analysts noted that FedEx has been managing slower shipping demand, cutting costs, streamlining its network, and handling tariffs. Yet, as they emphasized, “It’s all about oil.” While earnings and other financial metrics matter, oil prices are currently the main driver.

Last month, Evercore’s five-star-rated analyst Jonathan Chappell raised his price target on FDX stock from $364 to $380. He noted that the company is showing “promising signs” with stronger demand and effective cost management.

Meanwhile, some analysts warn that U.S. and Israeli strikes on Iran, combined with Iran’s attacks on cargo ships, could pose the biggest threat to global shipping networks since the pandemic. Such disruptions may ripple through the supply chain, affecting retailers and broader commerce.

**What to Expect from ****FedEx’s **Q3 Earnings

Analysts expect FedEx to post earnings per share (EPS) of $4.12 for Q3, marking a year-over-year decline of around 8%. At the same time, revenue is expected to reach $23.12 billion, up from $22.2 billion a year ago.

Notably, tensions in the Middle East have escalated after Iran attacked several neighboring countries and blocked the Strait of Hormuz, a key route supplying about 20% of the world’s oil. As a result, benchmark oil prices have surged, with Brent BZ +0.28% ▲ at $104.01 and  West Texas Intermediate CL +1.01% ▲ at $98.1 per barrel.

For FedEx, this has mixed implications. Higher oil prices could boost fuel surcharges, but they also raise transportation costs and disrupt supply chain, putting pressure on margins. Rising fuel costs can also contribute to broader inflation, potentially impacting consumer and business spending, which in turn may affect shipping volumes and pricing.

Nonetheless, the company has prioritized cost efficiency over the past three years, cutting fuel and purchased transportation expenses. Below is a screenshot showing FedEx’s expense breakdown.

Is FDX a Good Stock to Buy Now?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on FDX stock, based on 16 Buys, six Holds, and two Sells assigned in the last three months. The average FedEx share price target is $384.70, which implies a potential upside of 9.4% from current levels.

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