Travel News · 9 min read · March 10, 2026

What the Iran conflict means for your holiday budget

Oil above $100 a barrel, jet fuel up 56% in a week, energy bills under pressure. Here is 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 risen from around $70 before the conflict to above $110 per barrel, and jet fuel prices have jumped 56% since 28 February. But the impact on your holiday depends heavily on where you're going and which airline you're flying with. European short-haul travellers are best protected: easyJet and Ryanair are both around 84% hedged at pre-crisis fuel prices through mid-2026, meaning their fares face only modest upward pressure in the near term. Long-haul routes — especially those that previously connected through Gulf hubs — face significantly higher costs and disruption. The wider economic picture is concerning: the Resolution Foundation warns sustained energy prices could add £500 to typical annual household bills from July, and the British Chambers of Commerce now forecasts UK inflation at 2.7% by year end, up from its previous 2.1% forecast. For holidaymakers, the practical advice is clear: if you have a European summer holiday in mind, booking now locks in current fares before hedging protection thins and demand peaks. Already-booked prices are fixed — airlines cannot add surcharges to confirmed tickets.

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. Within days of the US and Israeli strikes on Iran and the near-closure of the Strait of Hormuz — through which roughly one fifth of the world's oil passes — the price surged above $110. At points during the first week of the conflict, it touched $120.

That matters to your holiday because jet fuel is made from crude oil, and jet fuel accounts for about one fifth of airlines' operating expenses. Jet fuel cost $3.95 a gallon by early March 2026 — up 56% from $2.50 in late February, one day before the conflict began. Industry analyst James Noel-Beswick described these as "stratospheric moves in global jet pricing."

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 fear
2. Jet fuel prices follow — typically with a short lag, and often rising faster than crude because refiners add "panic surcharges" on top
3. Airline fuel costs rise — unless the airline has locked in prices through hedging contracts (more on this below)
4. Airlines pass costs on — through higher base fares, formal "fuel surcharges" added to ticket prices, or both
5. Your ticket costs more — with a further lag of typically two to six weeks between the oil price spike and fares visibly rising

The good news is that the chain has several points where it can be interrupted — most importantly by hedging — and the impact varies significantly depending on your route and airline.

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

Not all flights are equally exposed. The impact varies dramatically by route type.

European short-haul: modest increases, well protected

For the most common UK holiday flights — to Spain, Greece, Portugal, Turkey, Italy and similar destinations — the fare impact is expected to be relatively contained, at least through summer 2026. The price increase for classic European destinations has so far been moderate, and the airlines that dominate these routes (easyJet and Ryanair) have strong fuel hedging in place that limits their exposure to the current price spike. Expect fares on European short-haul to rise in the range of 2–4% in the near term — meaningful, but not catastrophic.

Long-haul via Gulf hubs: significantly more expensive

If your holiday previously involved flying through Dubai, Doha or Abu Dhabi — as a huge proportion of long-haul UK travel does — you face a double problem: route disruption and higher fuel costs. A flight from Toronto to Delhi that was around $1,000 just days before the conflict tripled in price at its peak, before settling back at around $1,800 — still double the average price before the conflict. UK travellers on similar Asia-Pacific routes have seen comparable spikes. International flights across the Atlantic or other long-haul routes could see increases of as much as 20% or more if oil prices remain elevated — partly because larger aircraft burn more fuel, making the per-seat cost increase larger in absolute terms.

Long-haul via non-Gulf routes: more moderate, some disruption

Routes to the Americas, West Africa, and destinations served by non-Gulf routings face fuel cost pressure from rising oil prices, but avoid the route disruption that compounds the problem for Asia and East Africa connections. Expect fare increases in the 5–10% range, though this depends heavily on how long oil remains elevated and which airline you fly with.

Your full holiday rights guide

What your rights are if FCDO advice changes, your flight is cancelled, or your tour operator collapses — all explained in plain English.

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.

Here is where the major UK-relevant airlines currently stand:

The practical read-through: easyJet and Ryanair fares for spring and early summer are the most price-stable of any carrier right now. Both have locked in fuel at prices well below today's market rate for the vast majority of their flying through June. British Airways fares face more upward pressure as the year progresses, and any airline without meaningful hedging — particularly SAS — has no buffer between the oil price and your ticket cost whatsoever.

One important nuance: jet fuel prices typically rise even more than crude oil prices, due to so-called panic surcharges. Even if oil stabilises, the elevated jet fuel cost will remain baked into airline operating costs. Hedging protects airlines from the oil price rise — but as those contracts eventually roll off and are replaced at higher market rates, the benefit fades.

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. The fare on your confirmation is your fare.

This applies whether you booked a month ago or a year ago, and regardless of what has happened to oil prices since. Your booking is a contract at the price agreed. This is one concrete financial reason why booking ahead — locking in prices before the market fully reprices — has always made sense, and makes especially strong sense in the current environment.

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 are concerned about any of these.

The complete Iran conflict holiday guide

Safety, rights, destinations and costs — everything UK holidaymakers need in one place.

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. Higher oil and gas prices ripple through the entire economy — and several of those ripples will affect your holiday budget indirectly even if your flights are fully hedged.

Energy bills

The UK imports around 40% of its oil and 60% of its gas, with much of the latter piped from Norway — largely unaffected by the Middle East crisis. But disruption to global gas supply, particularly the suspension of Qatari LNG exports, is pushing wholesale prices sharply higher. The Resolution Foundation has warned that if recent rises in oil and gas prices are sustained, they could add around a percentage point to inflation and £500 to typical annual household energy bills.

The immediate pain is softened by the Ofgem energy price cap, which was already set for a reduction in April and protects most households until July. The government has confirmed that the price cap will protect households until the start of July, when it is reviewed. But if wholesale prices remain elevated, a significant rise in the July cap now looks more likely than not. That's money coming out of the holiday budget before you've even bought a suitcase.

Petrol

UK forecourt prices have already started rising. Petrol rose from 132.8p per litre on 28 February to 137.5p by 8 March, and diesel from 142.4p to 151p over the same period. The RAC has confirmed prices are "likely to rise" further. For families driving to the airport — or driving on holiday within the UK — this is an immediate and unavoidable cost increase. Fuel industry experts note that supermarkets typically hold out longer before passing on wholesale price rises than independent dealers, so filling up at a supermarket forecourt may save you a few pence per litre in the short term.

Inflation and spending power

The wider inflationary effect is where the holiday budget squeeze becomes most significant over the medium term. The British Chambers of Commerce now forecasts UK inflation at 2.7% by December 2026, significantly higher than its previous forecast of 2.1%. The OBR has already cut its 2026 growth forecast from 1.4% to 1.1%. And JPMorgan's chief UK economist has said the Bank of England's anticipated March interest rate cut is now off the table, with a "lengthy pause" on cuts now a real risk — meaning mortgage costs stay higher for longer for the millions of UK homeowners on variable or tracker rates.

The cumulative effect: higher energy bills, higher petrol, higher mortgage costs, and a higher general cost of living all compete with the holiday budget. This matters more for some families than others, but it is a real constraint on discretionary spending that the travel industry will feel through the second half of 2026 if the conflict persists.

Food prices

A less obvious but real ripple effect: higher oil prices push up the cost of agricultural inputs — fuel for farm machinery, fertiliser derived from natural gas, and the cost of transporting food from farm to shelf. Food economists warn that if oil prices remain elevated for more than a month, supermarket prices will follow. The holiday grocery shop, the airport sandwich, the all-inclusive resort's food costs — all are affected downstream.

Book now or wait? An honest answer

This is the question every undecided holidaymaker is asking. Here is our honest, unvarnished answer — acknowledging that nobody can predict the future with certainty.

The case for booking now

• You lock in current fares. Whatever fares are today, they reflect only a partial repricing for the fuel cost increase. The full impact of higher jet fuel on published fares typically takes four to six weeks to come through — that window may be closing.
• Hedging protection thins as the year goes on. The airlines most exposed to summer fare increases are those whose hedging contracts run out — and easyJet's cover drops from 84% in H1 to 62% in H2. Book a September holiday now and you benefit from current hedged pricing; wait until June and the airline may be repricing based on a much higher fuel cost.
• Demand is surging for European alternatives. Millions of people who were planning Gulf or long-haul holidays are pivoting to Spain, Greece, Portugal and Italy. When demand increases and supply is fixed, prices rise. The longer you wait, the higher the base fare pressure from demand, independent of fuel costs entirely.
• 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.

The case for waiting

• The conflict may resolve quickly. If a ceasefire or diplomatic resolution emerges in the next two to four weeks, oil prices could fall sharply and quickly. Goldman Sachs' base case in a short disruption scenario has Brent crude retreating towards $70-73. In that scenario, fare pressure eases and early bookers may have paid a small premium.
• Uncertainty is genuine. Nobody knows how long this conflict will last. Booking a long-haul holiday through a Gulf hub right now involves real uncertainty about routing, connections, and airline operations that may not be worth the risk for some travellers.

Our read

For European short-haul holidays — Spain, Greece, Portugal, Italy, Turkey — the balance of evidence strongly favours booking now. You face modest but real fare upward pressure from both fuel costs and demand displacement, your legal protections are strong if something goes wrong, and the downside of waiting outweighs the upside.

For long-haul holidays via Gulf routes, the picture is more genuinely uncertain. If you can wait two to three weeks for more clarity on the conflict's duration without losing your preferred dates, that patience may be rewarded — but there is real risk that prices rise further and availability tightens in the meantime.

Aviation management expert John Gradek's advice for European trips is direct: "Now's the time to buy." We broadly agree — with the caveat that you should book flexible fares where available, and ensure you have package holiday protection or comprehensive travel insurance in place.

Seven ways to protect your holiday budget right now

• Book European flights sooner rather than later. Fares on easyJet and Ryanair routes are currently among the most price-stable available, but that window won't last indefinitely. If your dates are set, lock in the price now.
• 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. The peace of mind is worth a premium right now.
• Lock in an all-inclusive deal. All-inclusive packages fix your food, drink and accommodation costs at the point of booking. If food and hospitality inflation continues to rise at your destination, you're insulated from it. All-inclusive is unusually good value in an inflationary environment.
• 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 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-August at meaningfully lower prices — and the demand surge from displaced Middle East travellers will be most acute in peak school holiday periods.

The smarter holiday alternatives nobody is rushing to (yet)

If you're reconsidering your destination, these are the places that offer everything you were looking for — without the price rises that will follow the crowd.

The bottom line

The financial pressures from the Iran conflict are real, layered, and likely to persist for at least several months. Higher jet fuel costs, rising energy bills, squeezed household budgets, and a demand surge into European destinations all point in the same direction — holidays will cost a little more in 2026 than they would have without the conflict.

But "a little more" is the operative phrase for most UK holidaymakers. European short-haul fares are buffered by airline hedging. Package holiday protections mean your money is safer than it might feel. The destinations most UK families go to — Spain, Greece, Turkey, Portugal — are operating normally and will be welcoming visitors all summer.

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.