Travel News · 9 min read · Updated April 17, 2026

What the Iran conflict means for your holiday budget

Oil near $100 a barrel, the Strait of Hormuz still blocked, energy bills rising in July. 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 spiked above $115 at the height of the conflict before easing to around $95–100 as a fragile ceasefire took hold — still around $30 higher than before the conflict began. The Strait of Hormuz remains effectively closed under a US naval blockade, keeping oil markets volatile and the EIA forecasting a potential return to $115 in Q2. European short-haul travellers are best protected: easyJet has 70% of its summer fuel needs hedged, and Ryanair holds around 80% coverage for the current financial year, meaning their fares face only moderate near-term upward pressure. Wizz Air's hedging cover rolled off in March and the airline is now fully exposed to spot prices. The wider economic picture is worsening: the Bank of England expects inflation to hit 3.5% in Q3 2026, the July energy price cap is forecast to rise by around £217, and the median working-age household is expected to be around £480 worse off this year than if the conflict had not occurred. For holidaymakers, the practical advice remains clear — if you have a European summer holiday in mind, booking now locks in current fares before hedging protection thins further and demand peaks. Already-booked prices are fixed.

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, touching $115 at its peak. Since the announcement of a fragile ceasefire on 7 April, prices have eased back to around $95–100. The Strait of Hormuz remains effectively closed under a US naval blockade, and the EIA forecasts oil could return to $115 in Q2 if disruptions continue. Markets remain volatile, and a breakdown of the ceasefire — which is due to expire around 22 April — could push prices sharply higher again.

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." Even with the ceasefire, jet fuel prices remain well above pre-conflict levels.

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 "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.

Why your summer 2026 flight could cost more...

...and what to do about it now

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 early 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 meaningful 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 2–5% in the near term — meaningful, but not catastrophic. That said, demand displacement from travellers who have cancelled Middle East and long-haul holidays is pushing up prices on Spain, Greece and Portugal routes independently of fuel costs, so the sooner you book, the better.

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 pre-conflict average. UK travellers on similar Asia-Pacific routes have seen comparable spikes. International long-haul routes could see increases of 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, updated to reflect the latest available information:

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 a significant share of their fuel at prices well below today's market rate. British Airways fares face more upward pressure as the year progresses, and Wizz Air — whose hedging contracts expired in March — is now buying fuel at spot prices that are around 40% above where they were before the conflict.

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. easyJet CEO Kenton Jarvis has publicly confirmed his airline will not add surcharges to existing bookings.

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 Ofgem energy price cap fell by 7% on 1 April 2026, reducing the average annual dual-fuel bill to £1,641 for a typical household. This is welcome short-term relief — but the cap is set using a three-month average of wholesale prices, and it does not yet reflect the spike caused by the conflict. EDF Energy forecasts the July 2026 cap will rise by around £217, pushing annual bills back up towards £1,858. The Bank of England expects household energy prices to increase when the July cap kicks in, contributing to an inflation peak of around 3.5% in Q3 2026. Overall, economists estimate the median working-age household will be around £480 worse off this year than if the conflict had not occurred. That is money coming out of the holiday budget before you have even bought a suitcase.

Petrol

UK forecourt prices rose sharply in the weeks following the conflict. The Strait of Hormuz remains effectively closed, keeping upward pressure on oil and therefore pump prices. For families driving to the airport — or driving on holiday within the UK — this is an 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 Bank of England now expects CPI inflation to hit around 3.5% in Q3 2026 — before the conflict it was expected to settle near 2% for the rest of the year. The Bank held interest rates at 3.75% at its March meeting, and economists at Deutsche Bank and others have warned that rate hikes are now possible rather than the cuts that were previously anticipated. For the millions of UK homeowners on variable or tracker rates, mortgage costs staying higher for longer is a real additional pressure on discretionary spending.

The cumulative effect: higher energy bills, higher petrol, prolonged 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, 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, and that the situation has changed since the ceasefire was announced on 7 April.

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. easyJet's cover has already dropped from 84% earlier in the year to 70% for summer, and falls further 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 — independently 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 ceasefire creates a genuine window. A fragile two-week ceasefire is in place and a second round of peace talks is being sought. If a lasting deal emerges, oil prices could fall sharply and quickly, easing fare pressure. In that scenario, early bookers may have paid a small premium.
• The ceasefire expiry adds uncertainty. The truce expires around 22 April without a confirmed extension or deal. A return to active conflict could push oil back above $115 and trigger fresh disruption. If you are travelling to a long-haul or Gulf-routed destination, waiting a few weeks for more clarity on the conflict's duration carries real logic.

Our read

For European short-haul holidays — Spain, Greece, Portugal, Italy, Turkey — the balance of evidence strongly favours booking now. You face 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, waiting a further two to three weeks for clarity on the ceasefire situation is a reasonable call. If talks progress, prices may ease. If the ceasefire breaks down, you will be glad you have not already committed.

Either way, use flexible fares where available, and ensure 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 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.