** Jefferies cut price target on U.S. airlines after jet fuel prices jumped about 50% on Middle East tensions

** Brokerage says higher fuel prices will squeeze airline profits because fares were set assuming cheaper fuel

** Adds if prices stay high, airlines may see weaker demand or cut flights

** Brokerage also raises near-term 2026 jet fuel estimates but assumes prices fall back to pre-war levels in the second half, lifting full-year fuel costs by about 11% on average

** As of last close, Dow Jones U.S. airlines index .DJUSAR had fallen 15.1% YTD

(Reporting by Apratim Sarkar in Bengaluru)

((Apratim.Sarkar@thomsonreuters.com))