Does the Iran conflict affect your money?

The world feels a bit wobbly right now and it's hard not to wonder what it all means for your bank account.

The honest answer is: probably less than the headlines are making you think. Yes, some things are already shifting but a lot of what's being reported are possibilities, not certainties. Here's what's actually going on, and where it's worth paying attention.

Petrol prices are up, but context matters

Fuel prices have risen since the conflict began. Petrol is up around 6p a litre and diesel has climbed more sharply, by roughly 12p. That's noticeable, but it's worth keeping in mind that prices have been higher before and the market has recovered.

Oil prices are volatile right now, moving with every development in the conflict. Analysts suggest every $10 increase in crude oil adds roughly 7p to a litre of petrol. If prices stay high, 150p per litre is possible but not guaranteed.

In the meantime, a few simple habits can help:

• Combine errands into fewer journeys where you can.  It sounds obvious, but most of us don't do it consistently. A bit of planning before you leave the house can cut your weekly mileage more than you'd expect.

• Drive smoothly.  Gentle acceleration and easy braking uses meaningfully less fuel than an aggressive style. If you're on a motorway, keeping a steady speed rather than constantly adjusting makes a real difference too.

• Find the cheapest pump near you.  Prices vary more than most people realise, even within the same town. Apps like Snoop can show you where to fill up for less. Over a month of regular fill-ups, that gap adds up.

  
  

One thing worth knowing: higher fuel costs can eventually nudge up food and goods prices too, since transport is a cost for most businesses. This tends to happen gradually rather than overnight.

Mortgages: act if you're coming up for renewal

Before the conflict, the expectation was that fixed mortgage rates would continue to drift downward through 2026. That's now less likely in the short term. A number of lenders have pulled deals from the market and repriced upward, reacting to uncertainty in their own funding costs.

As of 10 March 2026, the average two-year fixed rate sits at 4.93% and the average five-year fix at 5.03%. These aren't historically extreme levels but if your deal is ending in the next few months, it's worth acting rather than waiting.

What to do now:

• If your deal ends in the next six months, start looking at rates today

• Lock in an offer early. Most lenders let you secure a rate before your current deal expires

• Speak to an independent broker. They can see the whole market, not just one lender's products

  
  

If you're not coming up for renewal, there's nothing immediate you need to do.

Energy bills: you have more protection than you might think

It's easy to assume energy bills are about to spike, but the situation is more reassuring than the headlines imply. Ofgem's price cap is still in place for households in England, Wales and Scotland, and unit prices are actually going down in April.

The genuine uncertainty sits further ahead. What happens in the wholesale energy market between now and late May will determine what the cap is set at from summer. A sustained period of high wholesale prices could push bills up later in the year but that's not yet confirmed, and the government has intervened before when costs ran too high.

The one group facing a more immediate challenge is households that use heating oil, common in rural areas and much of Northern Ireland. There's no cap on heating oil and prices have risen sharply.

If you use heating oil:

• Contact your supplier now to discuss your next order

• Get written clarity on the price before you commit

• Check whether your local council or Citizens Advice has support available

  
  

For everyone else: there's no urgent action needed on energy right now. Keep an eye on the Ofgem announcement expected in late May.

Inflation: higher than hoped but not a repeat of 2022

The official forecast at the start of March put inflation at around 2.3% this year, easing to 2% by 2027. Analysts now think those numbers are optimistic, but they're also clear that this is unlikely to resemble the 11.1% peak seen in October 2022.

That 2022 spike was partly driven by Ukraine's role as a major producer of wheat and edible oils. The current conflict doesn't carry the same direct pressure on global food supply, which limits how far prices can realistically run.

Expect some upward drift in the cost of goods and services, think your weekly food shop, delivery surcharges or the price of a new appliance. Things that are energy-intensive to make (glass, packaging, electronics) or heavily reliant on transport to reach you tend to feel it first. But the trajectory is likely to be gradual rather than sudden.

Interest rates and savings: a mixed picture

The Bank of England was widely expected to cut interest rates in March. That's now unlikely. Analysts who'd been forecasting a cut have stepped back, given the inflation uncertainty.

That's frustrating news if you're borrowing, but it's not a crisis. Rates have been at roughly these levels for a while now and households have been adjusting.

If you have variable-rate debt, like a credit card, personal loan or tracker mortgage, it's worth checking whether overpaying makes sense right now. With rates unlikely to fall soon, every extra pound you put in reduces the balance that's accruing interest, which can save you a meaningful amount over time.

For savers, the picture is a little brighter. Rates are likely to remain relatively competitive for longer, and in uncertain times, having a well-stocked emergency fund gives you real peace of mind.

Just be aware that if inflation rises, your savings can lose purchasing power, meaning the same amount of money buys you less than it did before. If a weekly food shop costs £100 today and inflation pushes that to £104 next year, your savings need to be growing at least as fast just to keep up.

It doesn't make saving pointless (far from it) but it's a good reason to shop around for the best rate rather than leaving money sitting in an account that's barely paying anything.

Holidays and travel: book sooner if you have plans

Jet fuel costs have risen and that will eventually feed into airfares if prices stay high. Airlines use hedging strategies to buffer short-term shocks, but the longer duration matters.

If you have a summer trip in mind, booking sooner rather than later is sensible both for price and for availability. Some routes near the conflict region may see reduced options. Flexible travel insurance is also worth checking if you haven't already.

That said, most popular UK holiday destinations like Spain, Portugal, Greece and the US are not directly affected by airspace restrictions, and there's no reason to shelve travel plans on that basis.

The bottom line

Financial uncertainty is uncomfortable, but it's worth separating the genuine risks from the noise. Some costs are rising and that's real, but the UK has navigated difficult economic moments before, protections are in place for many households and most of the scenarios being discussed are possibilities rather than certainties.

The most useful thing you can do right now is take a calm look at your own position, particularly if you have a mortgage renewal coming up or use heating oil, and take small steps where they make sense.