In Iran, as of the 10th of March 2026, approximately 1,630 people have been killed as a direct result of the Israeli-American strikes that began on the 28th of February 2026.
Global oil markets reacted immediately to the escalation. The price of crude oil increased from about $67 per barrel before the strikes on 28 February to nearly $97 by 2 March 2026. This sharp rise was largely driven by disruption in the Strait of Hormuz after Iran claimed it would attack any vessel trying to pass through the strait.
The Strait of Hormuz is the world’s most critical oil trade route for global oil trade, carrying approximately a quarter of the world’s seaborne oil shipments. Around five per cent of this oil is exported to Europe, and 13 per cent of global liquefied natural gas flows that pass through the strait. Disturbances to this route therefore, have the potential to significantly increase energy prices internationally, including in the UK.
Although Iran is approximately 4,000 miles away from the United Kingdom, the consequences of this war on the UK economy could be huge. The UK Prime Minister has stated that a key priority for him is “supporting families” facing soaring energy and petrol prices. In response, Chancellor Rachel Reeves has warned that ” price gouging ” by suppliers and petrol stations will not be tolerated.
Eighty-four per cent of the crude oil that passes through the Strait of Hormuz is destined for Asian markets, meaning that any disruption to shipping in the strait could have significant consequences for global energy prices. At the same time, Russia may emerge as an unlikely benefactor of the conflict. Temporary sanctions relief on its crude oil exports to India has boosted the demand for its oil, increasing the value of its crude oil exports amid rising global prices.
The conflict is also likely to affect countries in the Global South. Around one third of global seaborne trade in fertilisers passes through the Strait of Hormuz, and approximately fifty-four per cent of these shipments are destined for some of the world’s least developed countries. Disruptions to this trade could push fertiliser prices higher, increasing agricultural production costs and contributing to rising global food prices.
Higher fertiliser costs may also affect the UK indirectly. British farmers rely heavily on imported fertilisers, meaning price increases can raise domestic production costs, and ultimately feed through into higher food prices for customers. Rising food costs could strain public finances and place additional pressure on household budgets, potentially complicating progress towards sustainable development goals in more vulnerable economies.
Iran has retaliated against the Israeli-American strikes by targeting assets in neighbouring Gulf states. Iranian officials defended these actions by arguing that U.S. bases and military assets in other Gulf countries were “legitimate targets”. As tensions escalate, tourism across the Middle East faces an estimated $56 billion loss. Air travel disruptions have halted or significantly reduced flights to major regional hubs such as Dubai, a city that relies heavily on year-round international tourism.
These disruptions may also have economic implications for the United Kingdom. Large numbers of British expatriates live and work in Gulf states such as the United Arab Emirates, and many UK businesses maintain commercial ties with the region in sectors including finance, construction, and tourism. Reduced travel and economic activity in these hubs could therefore affect British airlines, firms, and workers connected to the region.
Although the conflict is geographically distant from the United Kingdom, its economic effects are likely to be felt domestically through multiple channels. Rising oil prices, disruptions to fertiliser supply, and economic instability in key Middle Eastern hubs all contribute to higher global costs that ultimately feed into UK inflation. Energy and food prices are particularly sensitive to geopolitical shocks, meaning British households may feel the effects through higher petrol, heating, and grocery bills. At the same time, disruptions to travel and business activity in Gulf states could affect British firms and workers with ties to the region. The strikes, therefore, illustrate how deeply interconnected the global economy has become, where conflicts thousands of miles away can quickly translate into tangible economic pressures at home.
Photo by Jeff Kingma on Unsplash