Oil prices have been trending higher over recent weeks and currently sit above $100 per barrel. Escalations in the Middle East have acted as the catalyst. Even though the broader stock market hasn’t fallen significantly with this latest round of attacks, investors can’t ignore the impact that it could have on individual companies.

Here’s one winner and one loser I’m noting.

Boosted cash flow

Let’s start with a company that should benefit from elevated oil prices. I’m picking Shell (LSE:SHEL). The logic here is relatively straightforward. Higher oil and gas prices can translate into substantially higher cash flows from its upstream operations.

Importantly, Shell’s already generating plenty of cash. In Q2, adjusted earnings came in at £7.25bn, while cash flow from operations exceeded £15.55bn. Higher-for-longer oil prices will very likely help here, particularly if the current price spike reflects genuine supply shortages rather than simply speculative buying.

Even though I think the share price will benefit (it’s already up 34% in the past year), one of the wins could be for income investors. Shell currently targets distributing 40%-50% of cash flow from operations through dividends and share buybacks, while aiming to increase its dividend per share by around 4% annually.

Therefore, a sustained period of $100-plus oil could leave management with considerable amounts of surplus cash. This could fund further buybacks or special dividends.

There are risks, of course. For example, governments could also respond with higher windfall taxes. But on balance, I think it’s one of the main benefactors of oil being above $100.

Low altitude

On the other hand, International Consolidated Airlines Group (LSE:IAG) could struggle. Even though I’m a big fan of the business (it’s up 8% in the last year), the coming months could be tough if oil prices march higher still.

Fuel and emissions cost the group £6.1bn in 2025, and IAG was already expecting roughly £7.7bn of fuel costs in 2026 based on its May assumptions. Its own sensitivity analysis showed that a sufficiently high-jet-fuel-price scenario could push that towards £8.4bn.

Earlier this year, IAG said it was around 70% hedged on oil needs for 2026, but that amount falls as we move forward into next year. Therefore, the longer Brent stays above $100, the more of a headache it becomes.

In May, IAG warned that surging jet-fuel prices were contributing to lower expected annual earnings, with its 2026 fuel bill forecast to be around £1.7bn higher than in 2025.

It’s not just the direct cost hit. Oil at $100+ can push inflation higher and squeeze household disposable income. That potentially means consumers become more price-sensitive about flights, which would be another hit for revenue.

The flipside here is that oil is volatile, and we could see it fall sharply in a short period if peace occurs in the Middle East. But right now, I don’t think it’s a good time to consider the stock until we get more clarity.

Should you invest £5,000 in International Consolidated Airlines Group right now?

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Jon Smith does not hold any positions in the companies mentioned.