Recent market disruption has pushed Brent crude above $115 a barrel, while the Strait of Hormuz, which normally carries around 20% of the world’s oil supply, remains a focal point for global energy concerns.
The aviation impact is significant with the Middle East accounting for 10% of global international revenue passenger kilometres in 2025, underlining how important the region is as a hub for long-haul travel. Europe is also particularly exposed to jet fuel disruption, with 25% to 30% of its jet fuel demand typically originating from the Persian Gulf.
At the same time, official UK travel advice has hardened. The Foreign, Commonwealth & Development Office is currently advising against all but essential travel to the United Arab Emirates, while its Cyprus advice warns that regional escalation has created significant security risks and travel disruption.
Stephen Kennedy, Director at Defaqto, said: “The immediate impact of conflict involving Iran is disruption to aviation and energy markets, and that feeds directly into the cost of holidays. Airspace closures mean longer flight routes and higher fuel costs, while geopolitical tension tends to push up oil prices more broadly. As we’ve seen with previous conflicts, those pressures can feed into wider inflation, increasing costs across the travel sector.
“For insurers, most standard travel policies are not designed to cover losses arising directly from war. But the knock-on effects are significant. Higher medical costs abroad, more disruption and changing traveller behaviour can all add to claims costs over time, which can put upward pressure on premiums. So while the conflict itself may not be covered, its indirect impact is likely to be felt in both the price of holidays and travel insurance."
The latest Defaqto data also shows some insurers have paused quoting for certain destinations, including Dubai and Cyprus. That means travellers looking for cover for those destinations may now face reduced choice in the market.
For consumers, the insurance picture remains complex. ABI guidance says many travel policies do not cover losses linked to war, and that disruption, unused accommodation, excursions or transport may not be covered if the loss is caused by the conflict. It also says travelling against FCDO advice could invalidate cover.
Kennedy added: “Travellers should not assume that disruption linked to conflict will automatically be covered by their policy. The first thing to do is check the latest FCDO advice, and then check carefully with the insurer what is and is not covered. The key issue now is that this is no longer only a regional geopolitical story. It is becoming a personal finance story too, affecting the affordability of holidays, the availability of cover and the confidence people have when booking.”
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