Faster and smarter in the app... Open app

A couple at a kitchen table reviewing travel costs on a laptop, passports and documents nearby.
Travel News · 11 min read · Updated July 30, 2026

What the Iran conflict means for your holiday budget

Oil back up near $90 a barrel, energy bills up 13% this month, and jet fuel still running well above pre-conflict levels. Five months in, here's what it actually means for the cost of your holiday, and what you can do about it.

Short on time? Let us summarise this guide for you.

Brent crude has swung wildly over five months: from around $70 before the conflict, up to a peak of $126 in late April, back down to roughly $71 in early July as ceasefire talks progressed, and back up to around $90 now that fighting has resumed. The one genuinely reassuring update is on European short-haul fares: despite fuel costs squeezing airline profits hard, easyJet and Ryanair have actually kept fares broadly flat, in Ryanair's case even lower year on year, because demand has been softer and later than expected, and both airlines chose to compete on price rather than pass costs straight through. Ryanair's boss has also said the risk of a European jet fuel supply shortage, a real worry back in the spring, has now receded. The picture is worse away from the ticket price: the energy price cap rose 13% to £1,862 a year from 1 July, inflation is running at 2.6% and the Bank of England expects it to peak nearer 3.2% later this year, and the Bank has held interest rates at 3.75% for a fifth time. Long-haul travel via Gulf hubs remains the most exposed to cost and disruption. For most UK holidaymakers heading to Spain, Greece, Portugal, Turkey or Italy, the honest read is that a holiday will cost a little more this year, mainly through the wider cost of living rather than a big jump in the flight itself, and the case for delaying a booking to avoid fare rises is weaker than it looked back in April.

What you'll find in this guide:

How oil prices become flight prices: the chain explained

Before the conflict began on 28 February 2026, Brent crude oil was trading at around $70 a barrel. It has swung enormously since. Prices surged past $100 within days of the initial strikes and the near-closure of the Strait of Hormuz, through which a substantial share of the world's oil passes, before eventually peaking at more than $126 a barrel on 30 April. As ceasefire talks progressed through June, prices fell all the way back to around $71 by early July, close to where they started. That calm didn't last: when the ceasefire collapsed and fighting resumed in early July, Brent climbed back to the high $80s and low $90s, where it remains at the time of writing, around $90 to $92 a barrel.

That matters to your holiday because jet fuel is refined from crude oil, and jet fuel typically accounts for around a fifth of an airline's operating costs. Since the conflict began, jet fuel prices have consistently risen faster and further than crude itself, roughly doubling at points versus a one third rise in crude, because refiners have added extra margin on top during periods of acute supply uncertainty. Even now, with Brent well below its April peak, jet fuel costs remain well above where they were before the conflict.

The chain from oil well to your ticket price runs roughly like this:

  1. Crude oil price rises, driven by supply disruption at the Strait of Hormuz and market uncertainty
  2. Jet fuel prices follow, typically with a short lag, and often rising faster than crude because refiners add extra margin during periods of acute uncertainty
  3. Airline fuel costs rise, unless the airline has locked in prices through hedging contracts (more on this below)
  4. Airlines choose how to respond: by raising fares, by absorbing the cost into lower margins, or a mix of both, depending on how much competitive pressure they're under
  5. Your ticket costs more, the same, or occasionally less, depending on that airline's hedging position and how strongly it wants to compete for weaker demand

That last step is the genuine surprise of the past few months: several airlines have chosen to hold or even cut fares rather than pass rising costs straight through, because demand has been softer and bookings later than expected. We cover what that has actually meant for fares below.

How much more will flights cost? It depends where you're going

Not all flights have been equally exposed, and the picture has turned out somewhat differently to what airlines themselves predicted back in the spring.

European short-haul: fares have actually held up well

For the most common UK holiday flights, to Spain, Greece, Portugal, Turkey, Italy and similar destinations, the fare impact has been smaller than airlines themselves expected. easyJet and Ryanair both reported sharp falls in profit for the April to June quarter because of fuel costs, but rather than passing those costs on in full, both airlines cut or held fares to keep filling seats amid softer, later booking patterns. Ryanair's average fare actually fell slightly year on year. That's genuinely good news if you're booking a European break, though it isn't guaranteed to hold: hedging cover thins as the year goes on, and if demand picks up into late summer and autumn, some of that discipline could ease.

Long-haul via Gulf hubs: still the most expensive and disrupted

If your holiday involves flying through Dubai, Doha or Abu Dhabi, as a large share of UK long-haul travel does, you continue to face a double problem: route disruption from the airline suspensions covered in our safety guide, and higher fuel costs on the routes that are operating. Long-haul fares on Gulf-routed journeys have remained noticeably higher than before the conflict, and that's likely to persist for as long as European and Asian carriers keep their own suspensions in place into the autumn.

Long-haul via non-Gulf routes: moderate pressure

Routes to the Americas, West Africa, and destinations served by routings that avoid the Gulf continue to face fuel cost pressure from the still-elevated price of jet fuel, but without the compounding effect of route disruption. Expect some upward pressure on fares here, though nothing close to the scale seen on Gulf-routed long-haul.

The airlines already protected, and those that aren't

Fuel hedging is the airline industry's key defence against oil price spikes. Airlines use financial contracts to lock in future fuel prices months, sometimes years, in advance. When oil jumps suddenly, a well-hedged airline barely feels it in the short term. An unhedged one is immediately exposed. Five months in, here's where the major UK-relevant airlines currently stand, based on their most recent quarterly results.

  • easyJet. Around 72% hedged for the second half of its financial year (July to September) at roughly $726 per metric tonne. Reported a 70% fall in April to June profit, to £85 million from £286 million, driven by fuel costs and later bookings, but has so far chosen to hold fares rather than pass the increase on in full.
  • Ryanair. The best protected of the major carriers: around 80% hedged through to March 2027 at the equivalent of roughly $67 a barrel, plus an additional slice of next year's needs locked in at $85 a barrel during the brief ceasefire window in June. Its unhedged fuel still cost roughly $150 a barrel during the last quarter, and pretax profit fell around a third, but Ryanair chose to cut fares to stimulate demand rather than raise them. Its CEO has also said the earlier fear of a European jet fuel supply shortage has now receded.
  • Wizz Air. The least protected of the major European carriers, with hedging cover for the year to March 2027 at only around 55%. It has flagged a real financial hit from the conflict but is still planning to grow its schedule this summer.
  • Lufthansa. Around 77 to 82% hedged for 2026, but only around 40% for 2027, and it has paused new hedging, effectively betting that fuel prices will ease rather than climb further.
  • IAG (British Airways, Iberia, Aer Lingus, Vueling). Roughly 60 to 70% hedged for the remainder of 2026, with cover falling as the year progresses, meaning more exposure into the final quarter than the airlines above.
  • SAS. Among the most exposed of the airlines relevant to UK travellers, having entered the crisis with little to no hedging cover in place, and it cancelled flights earlier in the year as a result of fuel-related pressures.

The practical read-through: easyJet and Ryanair have both absorbed a real profit hit rather than pass the full cost on to passengers, at least for now. That's a genuinely different outcome to the one predicted back in the spring, when fare rises of several percent were widely expected on European short-haul. British Airways and its IAG siblings face more upward pressure as hedge cover falls further into the year, and airlines with thinner protection, such as Wizz Air and SAS, remain the most exposed if oil prices climb again.

One important nuance remains true regardless of any single airline's choices: jet fuel prices have consistently moved further than crude oil prices throughout this conflict. Even a period of calmer oil prices, like the one seen in late June and early July, doesn't fully unwind the higher cost airlines are paying for fuel itself.

If you've already booked: the good news

If you have an existing booking, here is the most important thing to know: your price is fixed. Airlines cannot retrospectively add fuel surcharges to tickets you have already bought. Whatever you paid when you booked is what you pay. easyJet has publicly and repeatedly confirmed it will not add surcharges to existing bookings, a commitment it has maintained throughout the conflict.

This applies whether you booked in March or last week, and regardless of what has happened to oil prices since. Your booking is a contract at the price agreed.

What can change after booking is optional extras. Car hire companies or hotels may adjust their pricing independently, and some third party "fuel surcharge" fees on package bookings can occasionally be subject to revision under contract terms. Read your booking conditions carefully if you're concerned about any of these.

Beyond flights: the wider cost of living squeeze

The conflict's financial impact on UK households extends well beyond the price of a plane ticket, and this is where the squeeze has actually been felt most, rather than in flight prices themselves.

Energy bills

Ofgem's energy price cap rose by 13% on 1 July 2026, from £1,641 to £1,862 for a typical dual-fuel household paying by direct debit. Ofgem has been explicit that the increase reflects higher wholesale gas prices caused by the conflict. The next cap, covering October to December, will be announced by 26 August 2026; early industry predictions vary, with some suggesting a modest fall if wholesale prices stay where they are, but nothing is confirmed and the situation remains sensitive to further escalation.

Petrol

UK forecourt prices rose sharply through the spring and remained elevated through the summer as the conflict has dragged on. Fuel industry experts continue to note that supermarkets typically hold out longer before passing on wholesale price rises than independent dealers, so filling up at a supermarket forecourt may still save a few pence per litre.

Inflation and interest rates

CPI inflation stood at 2.6% in June 2026, above the Bank of England's 2% target. On 30 July, the Bank's Monetary Policy Committee voted to hold interest rates at 3.75% for the fifth time this year, with three of the nine committee members actually voting for a rate rise. The Bank's own projections now show inflation peaking at around 3.2% in the final quarter of 2026, a slight improvement on the sharper peak feared back in the spring, but still well above target. The Bank has separately warned that around 5.2 million UK households face higher mortgage costs by the end of 2028 as a result of the shock, up from 3.9 million expected before the conflict, though it describes the scale of those increases as likely to remain modest.

Food prices

The Food and Drink Federation has warned that grocery costs could rise by as much as 10% across 2026, driven mainly by higher energy costs and fertiliser prices, both of which are pushed up by the same oil and gas dynamics affecting your fuel bill. Analysts studying past shocks note that once food prices rise, they tend to come down only slowly, so this is one area where the effects of the conflict may be felt for some time even if the situation in the Gulf stabilises.

The cumulative effect: higher energy bills, elevated petrol prices, above-target inflation, and rising grocery costs all compete with the holiday budget, even where the flight itself hasn't got materially more expensive. This is a genuinely different story to the one we told back in the spring, when the flight price itself looked like the main risk. Five months on, it's the wider cost of living, not the ticket, doing most of the damage to household budgets.

Book now or wait? An honest answer

This is the question every undecided holidaymaker is asking, and the honest answer has shifted since our last update.

The case for booking now

  • Your fare is locked in regardless of what happens next. Given how volatile oil prices have been over five months, from $70 to $126 and back again, locking in a price removes that uncertainty entirely from your holiday budget.
  • Package holiday protection works best when booked in advance. If you book now and FCDO advice subsequently changes for your destination, you have full Package Travel Regulations protection: the right to a full refund. That protection is stronger than any cancellation policy.
  • Hedging cover for some airlines does thin later in the year. Both easyJet and IAG have less fuel protection in place for the final quarter of 2026 than they do right now, so a late-year booking carries somewhat more fare risk than one made today.

The case for waiting

  • Fares for European short-haul haven't actually risen the way expected. The pressure that seemed inevitable back in April, when several airlines predicted meaningful fare increases, hasn't materialised for most European routes. There's less urgency to book purely to beat a price rise than there was.
  • The conflict's trajectory remains genuinely uncertain. Five months of ceasefires breaking down and reforming means nobody can rule out either a lasting resolution or a fresh escalation. If you're travelling long-haul via a Gulf hub specifically, waiting for more clarity on airline schedules carries real logic.

Our read

For European short-haul holidays, Spain, Greece, Portugal, Italy, Turkey, the fare-driven case for booking immediately is weaker than it looked in the spring, since easyJet and Ryanair have both chosen to hold fares rather than raise them. That said, booking now still gets you a fixed price and strong legal protection, at no real cost, so there's little reason to delay just for the sake of it.

For long-haul holidays via Gulf routes, the picture hasn't improved in the way it has for short-haul. Fares and disruption both remain elevated, and several major carriers have suspensions running into October. Waiting for more clarity on your specific airline's schedule remains a reasonable call here.

Either way, use flexible fares where available, and make sure you have package holiday protection or comprehensive travel insurance in place before you commit.

Seven ways to protect your holiday budget right now

  • Book European short-haul with confidence. easyJet and Ryanair fares have held up better than anyone predicted in the spring, and both have committed to no retroactive surcharges. If your dates are set, there's no strong reason to wait.
  • Choose a package holiday over a DIY booking. Package holidays offer stronger legal protection if things go wrong, and tour operators often absorb some cost increases rather than passing them directly to customers.
  • Lock in an all-inclusive deal. All-inclusive packages fix your food, drink and accommodation costs at the point of booking. With grocery and food service costs still rising, that protection is worth more than usual right now.
  • Buy travel insurance now, with your booking. Insurance bought before a conflict-related event is far more likely to cover conflict-related disruption than insurance bought after. Don't leave it until the week before you travel.
  • Fill up the car at a supermarket forecourt. Supermarkets are typically slower to pass on wholesale price rises than independent fuel retailers. For UK staycations or airport drives, this makes a small but real difference.
  • Pay by credit card. Section 75 of the Consumer Credit Act provides a free additional layer of protection on purchases between £100 and £30,000. For large holiday bookings in an uncertain environment, this matters.
  • Consider shoulder season travel. If you have flexibility on dates, May, early June and September offer broadly similar weather to peak July and August at meaningfully lower prices, and with airline fare discipline still holding for now, the saving compared to peak weeks may be larger than any conflict-related premium.

The bottom line

Five months into the Iran conflict, the honest picture is more reassuring on flights than it is on the wider cost of living. European short-haul fares, the ones that matter to the vast majority of UK holidaymakers, have held up far better than airlines themselves predicted back in the spring, because easyJet and Ryanair chose to compete on price rather than pass rising fuel costs straight through. Long-haul travel via Gulf hubs remains the exception, with real cost and disruption that's likely to persist into the autumn.

Where the squeeze is real is everywhere else: a 13% jump in energy bills this month, inflation running above target, interest rates held at a level that keeps mortgage costs elevated, and grocery prices still climbing. None of that is about your flight, but all of it competes with your holiday budget.

The best thing you can do for your holiday budget right now is make decisions rather than postpone them. Book the holiday you want, lock in today's price, make sure you have the right cover in place, and look forward to going.

This page is reviewed and updated regularly as the situation develops.


Most-popular articles