The Attacks on Iran and Their Impact on the Economy
Peter McGahan
Monday 9th March, 2026.
I WAS in London during the week and in the hotel, like most hotels during a war crisis, cancellations rose very sharply overnight. It’s one of the biggest hits in times of crisis. Travel, leisure.
However, (I do not watch TV and don’t get my data from such drama) Sky TV was on in the background – long sigh. As much as I was in the middle of a series on how to invest, I must deviate to deal with the current noise of this scenario after the attacks on Iran.
When the headlines get loud, I do the same thing I do when markets wobble - turn the volume down and look for the mechanism.
The attacks on Iran are being sold as a moment that “changes everything”, and maybe a justification for war. The economic story is simpler. It is mainly about the price of energy, and a bit about the cost of moving goods around the world.
On March 5, 2026, Brent crude had jumped into the mid-$80s a barrel as the conflict widened and shipping through the Strait of Hormuz has been disrupted. The Strait is not a debating point, it is plumbing. Around a fifth of the world’s oil and a meaningful share of liquefied natural gas moves through it. When that plumbing is threatened, markets add a “risk premium” - an insurance surcharge for uncertainty.
That surcharge is real, but it is not automatically a lasting oil shock. Before this escalation, the International Energy Agency was already forecasting supply rising significantly faster than demand in 2026, with global inventories having built strongly through 2025. Slower global growth and the longer-term switch towards renewables mean the energy backdrop is not as tight as ‘some’ headline writers imply.
So where does the pain land? Energy is like a small tax on almost everything. If it stays high for a few days, it is mostly noise. If it stays high for weeks, it starts to change behaviour: households cut back, companies delay spending, and inflation leaks into everyday prices.
For the UK, the quickest route is gas and electricity. For businesses, the same squeeze shows up in freight surcharges, higher insurance for ships and cargo, and more expensive working capital, as firms carry extra stock “just in case”. We use a
lot of gas for power and heating, and we have limited storage compared with much of continental Europe. Cornwall Insight has suggested the recent wholesale jump could push the typical annual household bill up by around £160 from July, depending on how the Ofgem price cap resets.
If energy-driven inflation rises again, policymakers can feel boxed in. Cut interest rates and you risk stoking inflation. Hold rates higher for longer and you squeeze growth. That uncomfortable mix is why some economists are warning about stagflationary episodes if disruption drags on.
However, some oil can be rerouted using existing pipelines, and major consumers have stockpiles for exactly this sort of event. Demand is also not booming. Put those together and the base case is often “higher and choppy prices” rather than “permanent scarcity”.
What should you do with that, as someone trying to run a normal life?
Start by refusing to outsource your nervous system to a breaking-news banner. Separate the global economy from your personal one. You cannot control the oil price, but you can control how brittle your finances are to it. If your budget is tight, treat the next quarter like a stress test and build a little extra breathing room in cash if you can, even if it is only the equivalent of one higher energy bill.
If you are an investor, be wary of doing something “decisive” which is really just emotional. Geopolitical shocks can cause sharp falls and sharp rebounds. Selling in panic can lock in losses and leave you buying back later at higher prices. Diversification is dull, but it is what stops one crisis becoming a permanent financial injury.
I’ve written for years about ignoring noise and focusing on what moves the numbers - it is a habit worth re-learning this week.
The true impact of the attacks on Iran is not that “everything changes overnight”. It is that fossil fuel dependence imports volatility. Your job is not to predict the next twist or worry about it. It is to make sure your finances can cope if the insurance surcharge lasts longer than the headlines.
If you have a financial query on the economy and Iran, please email info@wwfp.net or call 01872 222422.
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser firm, Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
