Why Carnival, Royal Caribbean, and Norwegian Cruise Line Stocks Surged Today

Shares of cruise line operators rallied on Wednesday as oil prices fell.

Here's how some of the leading cruise stocks performed:

• Carnival (NYSE: CCL), up 11.1%
• Norwegian Cruise Line (NYSE: NCLH), up 7.6%
• Royal Caribbean (NYSE: RCL), up 4.3%

Relief rally

Travel stocks rebounded on reports of a two-week ceasefire between the U.S. and Iran. The agreement is expected to enable more energy-carrying ships to pass through the Strait of Hormuz. Oil prices dropped sharply on the news as fears of supply shortages subsided.

High energy prices affect cruise lines in several ways. For one, fuel is a major expense, so rising prices can directly impact their bottom lines. For another, surging energy costs can force consumers to cut back on nonessential expenses. If people decide to forgo vacations, that could dent cruise bookings.

Unsurprisingly, cruise stocks sank as oil and gas prices spiked after conflict erupted in the Middle East. Now, however, the potential for peace has investors breathing sighs of relief.

Investors should brace for volatility

Oil and gas prices could continue to move violently in response to Iran-related headlines. If peace talks fail, it will likely result in surging energy prices and plunging stock prices.

But if a lasting peace can be achieved, travel stocks could help to lead the financial markets higher as investors around the world celebrate.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.