What does the Middle East crisis mean for travel?

Last updated: 05 March 2026

The United States and Israel carried out joint military action against the Islamic Republican of Iran last weekend. Since then, Iran has launched broad retaliatory strikes aimed at key oil and gas sites as well as Western tourism and expat hotspots in the Middle East.

Travel businesses have watched this unfold with horror. Alongside the immense human tragedy, they are now scrambling to process a wave of cancellations as customers steer clear of a key destination. Budget assumptions are being torn up, leaving finance teams no choice but to unwind existing hedging positions in an effort to protect profits.

This crisis has major significance for any travel business operating in and around the Middle East. It represents more than the usual seasonal disruptions, carrying the power to dismantle carefully constructed budgets. It is not a crisis forged in a vacuum, so in order to understand the significance for travel, business must first understand the context, the market reaction, as well as how this could affect their daily operations in the coming months.

A historical quagmire

There are very good reasons that explain why America previously shied away from striking Iran. The vast nation is marked by the same kind of challenging terrain and dispersed population that made Afghanistan so inpenetrable. It has close ties with powerful organisations in neighbouring countries and is an ally to Russia and China. A hostage crisis at the height of the oil crisis was one direct cause of Jimmy Carter’s eviction from the White House and the American people have no appetite for another unending conflict in the Middle East.

For their part, some Iranians have long harboured an ideological distaste for the ‘Great Satan’ across the Atlantic. Unceremoniously killing the Iranian leader will likely lead to reprisals, whether that’s on Israel, allies in the region or the United States directly. For now, the Iranian response has been a full-fronted air assault on targets in the region. These have ranged from air bases to hotels and show little sign of stopping. At the time of writing, seven American servicepeople have died along with hundreds of Iranians, many of whom were civilians.

The US and Israel seem to have calculated that a land invasion of Iran would be unacceptably costly. Yet effecting lasting, stable regime change through aerial bombardment alone seems unlikely.

What comes next?

The big question is what exactly might come next. President Trump urged the Iranian people to take to the streets and take control of government. Yet despite widespread discontent in the past couple of years, there is no guarantee they will succeed.

For example, the Iranian security apparatus is organised and sophisticated. It boasts a broad network and powerful internal backing. Without a recognised figurehead, it is true that loyalties might collapse. However, it is also possible that any popular uprisings will again be crushed and that the previous authoritarian structure will reassert itself.

Iran’s reponse to relentless asault from American and Israeli forces risks drawing neighbouring states into a more dangerous regional conflict. With strikes against Qatar, Jordan, the UAE and even Cyprus, it has shown that it is willing to target nominally neutral areas, many of which draw vast numbers of travel bookings from UK consumers.

Media reports show thousands of British nationals stranded across the Middle East. Social media has also been inundated with accounts of drone strikes on hotels and beach clubs, shattering the peaceful facade that had prevailed across the Gulf. Things are escalating fast and currency markets are moving from one headline to the next. For travel customers, businesses and the entire financial system, there is a dangerous uncertainty when it comes to the near-term outlook.

Oil surges

As expected, Iran quickly used its main economic weapon and closed the Strait of Hormuz. Roughly 20% of the world’s oil flows through this narrow channel daily, giving Iran outsized leverage over the flow of the world’s most vital commodity.

Major oil indexes spiked to begin the week. As the chart below shows, the price of Brent crude jumped by around 6% over the course of a single day. Some analysts have suggested it could reach $90 per barrel based on this supply chain uncertainty.

Broader financial markets have been in something of a tailspin this week. Memories of the 2022 Russian invasion of Ukraine make Europeans particularly nervous about rising commodity prices. And although the UK at last appeared to have broken the back of inflation, there are fears that the strikes which took out a major gas refinery in Qatar could add several percentage points to the headline inflation rate by the end of next year.

While travel is an increasingly important consumer staple, it is vulnerable to economic downturns and inflation. If consumers have less money in their pockets, they will invariably choose to cut back on travel, either by booking more budget-friendly packages or by deciding not to travel at all.

The currency context

Owing to their safe-haven status, the US dollar and Swiss franc have performed particularly well against pretty much all other currencies on the globe. The pound meanwhile fell before bouncing off multi-week lows on Monday afternoon.

Going forward, there is a sizeable risk that the next stage of the conflict throws up something less predictable and more negative for the global economy. Should the conflict spin out of control, or should other major powers be drawn into a larger tustle, travel businesses can expect their profits to be squeezed and their cashflow thrown into question. Protecting your business should now be your fundamental objective.

If you’d like to discuss how you can manage or unwind your existing positions, book a quick risk consultation today. We will be able to help you manage your currency exposures in a simple, cost-effective way.