easyJet (LSE: EZJ) shares have nosedived. Today, the airline operator’s share price is hovering close to 366p (near 52-week lows), about 30% below its 2026 high.

Is there an investment opportunity here? Let’s take a look at the set-up for the FTSE 100 airline stock.

Is it as cheap as it looks?

At first glance, easyJet shares look very cheap. At present, City analysts forecast earnings per share of 65.9p for this financial year (ending 30 September) and 75.2p next financial year.

At today’s share price of 366p, these forecasts give us price-to-earnings (P/E) ratios of just 5.6 and 4.9. These are super-low earnings multiples.

Of course, the problem is that the situation in the Middle East adds quite a bit of uncertainty here. There are two main issues (that could result in the shares not looking as cheap).

The first is fuel prices (jet fuel’s one of the largest operational expenses for airlines). With oil prices up significantly, airlines could potentially be looking at huge cost increases in the near term and therefore lower earnings.

Now in January, easyJet said it had hedged 84% of its fuel needs for the first half of this financial year, 62% for the second half, and 43% for the first half of FY2027, at average costs of $715, $688, and $671 per metric ton respectively (versus today’s price of about $1,500 per metric ton).

So it does have some protection against higher fuel prices. But ultimately, it’s still very exposed, so if oil prices remain high we can expect earnings to fall.

The other issue is that if oil prices remain high, it could potentially hit consumer spending. If people are paying more for their petrol and heating, they may have less money to spend on travel.

One other thing to note here is that higher oil prices could slow interest rate reductions and keep mortgage rates elevated. This could also reduce discretionary spending.

Rebound potential

Of course, if the Middle East conflict ends soon and oil prices drop sharply, easyJet shares could turn out to be a major bargain at these levels. Back in January, the company told investors that demand for its services was high.

It noted at the time that bookings were building well for the summer season and that it had just had its largest ever January booking period. It also said demand for easyJet holidays (a key growth driver for the group) continues to grow, with customer numbers increasing 20% year on year.

An investment opportunity?

So the way I see it, the outlook here is heavily tied to the geopolitical backdrop. A lot will come down to oil prices.

Personally, I won’t be buying the shares for my own portfolio given the risks (I’m seeing better opportunities in the market right now). However, if an investor was looking for a high-risk, high-reward ‘special situations’ play, easyJet shares could be worth considering.