Qantas Airways (ASX:QAN) is facing pressure from volatile oil prices as uncertainty over the Middle East conflict persists, Jefferies said in a note on Monday.

The investment firm cut its fiscal year 2027 earnings per share estimate by 25%, putting it 10% below the consensus, due to expectations of higher fuel costs.

The re-escalation of the US-Iran conflict has pushed oil prices up again, but airline stocks have remained firm, suggesting the market still anticipates tensions to ease.

The impact of the conflict's on-and-off nature on the domestic and international economy will take longer to assess, while travel demand has stayed relatively resilient.

"Ultimately, near-term fuel cost increases are still not seen as structural, and so we continue to see upside," the firm said.

Jefferies maintained a buy rating on Qantas Airways but lowered its price target to AU$11.91 from AU$12.80.