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12 Mar 2026

How the war in the Middle East could affect your finances

Which? experts explain how the conflict could affect parts of your finances, from petrol prices and energy bills to pensions and mortgage rates

Megan ThomasResearcher & writer

Megan is a senior researcher and writer at Which?, with a background in data analysis and stats in the public and charity sectors.

A father sits with his child while looking at a bill

As the conflict between the United States, Israel and Iran continues, the knock-on effects are felt all over the world and are likely to reach your wallet sooner rather than later.

Here, Which? experts share how different areas of your finances might be affected by the ongoing conflict, from petrol prices to pensions, investments and your mortgage.

Please note: this article is for information purposes only and does not constitute financial or investment advice.

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How everyday costs are affected

One of the most immediate economic impacts of the conflict is the rise in oil prices.

The RAC has reported increases of 6.12p a litre for unleaded petrol, and 12.74p a litre for diesel since 28 February. These increases are likely to continue, as Iran has warned against the use of the Strait of Hormuz, an important shipping route for oil and gas.

The closure of shipping routes means pressure on prices will stretch far beyond the petrol pumps.

Laura Suter, director of personal finance at AJ Bell, explains: ‘The conflict could also disrupt global trade routes and supply chains, particularly if shipping in the Gulf becomes more difficult or expensive.

‘Even small changes to global shipping routes can increase transport costs and delivery times for goods heading to the UK. That can filter through to higher prices on shop shelves, affecting everything from clothing and electronics to household goods.’

Find out more: how to save money on fuel and other money-saving driving tips

How energy bills are affected

Sarah Ingrams, Which? energy expert says…

The wholesale global price of gas is currently extremely volatile. The wholesale gas price is what energy firms pay for the energy we use and is passed on to customers. It's a big driver of UK electricity prices, too.

Oil and gas infrastructure across Gulf states has been damaged, and Iran has warned ships not to use the Strait of Hormuz, a vital shipping route for about 20% of global oil and gas.

Most of the UK’s liquefied natural gas (LNG) comes from the US, and only a small proportion is imported from Qatar. However, gas storage levels in the EU are low after winter, and there is increased competition in the global LNG market from those that rely more on LNG from the Middle East.

We don’t know by how much and for how long instability in the Middle East will impact global gas prices.

Find out more: the full story on how conflict will affect your energy bills

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How investments are affected

If you hold investments, whether directly investing in shares or through a passive fund tracking an index such as the S&P 500 or FTSE 100, you’ll likely hold a few stocks vulnerable to repercussions of the war.

This could be companies directly exposed to shocks, such as a sharp rise in oil prices or extensive flight cancellations for airlines, or those that will experience secondary effects like increased inflation and higher goods transportation costs.

Tom Selby, director of public policy at AJ Bell, said: ‘We have already seen wobbles in global stock markets as a result of the US and Israel launching attacks on Iran.

‘As a result, there is a fair chance that if you log into your account to see your performance, there will be a dip in the last week or so.

‘At times like this, it is crucial to remain focused on your long-term goals. A short-term hit to your investment value shouldn’t be a cause for alarm. When markets go through tough patches such as now – and as we have seen plenty of over the past decade – it’s important not to get swept up in a wave of panic.’

Find out more: best stocks and share Isas 2026

How pensions are affected

Holly Lanyon, Which? pensions expert says...

If you’re paying into a defined contribution pension – either through a workplace scheme or a personal pension – your retirement savings will be invested in the stock markets.

When markets are volatile, you might see the value of your pension fluctuate too.

If you’re a long way off retirement, a short-term dip shouldn’t be too much cause for concern. Default pension funds are generally invested in a range of assets and are designed to handle ups and downs in the stock market. As you approach retirement, your savings typically move into safer investments.

If you’re already drawing down from your pension, or planning to soon, you may want to hold off on selling investments right now and wait until the market is more stable.

The Bank of England is expected to slow cuts to interest rates and may even increase them, as rising energy prices are likely to raise inflation. This could be a good thing for annuity rates, as they’re closely linked to interest rates.

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How mortgages are affected

Sam Wilson, Which? mortgages expert says…

A renewed threat of inflation from higher energy prices makes it less clear when the Bank of England will next cut the base rate, and the path the base rate will take over the next year.

What is clear is that the base rate cut pencilled in for March now looks very unlikely. This has caused more expensive borrowing for lenders and higher rates for consumers.

Since early March, most lenders have upped rates, but rate changes have been modest. The average two-year fixed rate has increased by 0.1 percentage points, to 4.93%. The average five-year fix has risen by 0.08 percentage points.

For the typical UK borrower, the impact of rising mortgage rates on monthly repayments is between £5 and £15 a month.

With product turnover high and rates edging up, borrowers may want to lock in to a deal sooner rather than later. This will protect them in the event that rate increases continue.

Find out more: mortgage rates are rising – how long should you fix for?

How insurance is affected

Dean Sobers, Which? travel insurance expert says…

If the Foreign, Commonwealth and Development Office (FCDO) has advised against travelling after you’ve booked and insured your trip, you may be able to make a cancellation claim – although this will depend on your specific policy. When we checked last year, only around a third of travel insurance policies included cover for war.

Currently, the FCDO is advising against all but essential travel to the UAE. This is not the case for Cyprus. You can check the FCDO's foreign travel advice to see the status of the country you're planning to visit.

If you are covered, you may need to prove you’ve exhausted other options for recouping your costs – for example, getting in touch with your travel agent, airline, holiday provider and/or accommodation provider to arrange rebooking or a refund. Fortunately, most (but not all) package-holiday tour operators and airlines will allow you to do this.

Don't cancel your trip before checking with your travel provider and insurer to discuss your options and cover entitlement, as cancelling prematurely could affect your right to claim on your insurance.

Even where the FCDO hasn’t advised against travel to your destination when you’re due to travel, you may still not be covered for claims made while travelling to the region if there’s a high likelihood of it being affected by the conflict. Most policies include ‘known event’ clauses, which effectively rule out cover for events that were foreseeable when you set off. If you’re in any uncertainty about whether your trip will be covered or what options you have, it’s best to contact the insurer directly to check.

Regardless, for any booked trips, it’s important to have travel insurance to cover you for medical emergencies, repatriation, baggage loss and other unexpected disruptions unrelated to the conflict.