Fears over impact of protracted conflict in the Middle East after US Israeli strikes on Iran

Fears of a protracted international conflict in the Middle East after US and Israeli airstrikes on Iran at the weekend have pushed up forecasts for oil price hikes.

Investment bank JP Morgan predicted Brent crude could hit $130 a barrel if the conflict sees a full closure of the Strait of Hormuz through which 20% of global energy supplies transits.

The strikes at the heart of the Iranian regime, which saw the country’s Supreme Leader Ayatollah Ali Khamenei killed, prompted a widespread reaction across the region that saw airspace closed and thousands of flights cancelled.

Travel disruption continued into the start of the week after airports in Dubai, Bahrain and Kuwait were targeted. In the immediate aftermath of the attacks oil prices spiked with Brent hitting a high of around $80 (up 10%) before falling back down.

However, analysts have warned that a drawn-out crises could see long-term prices rises as shipping insurers assess the increased risk of operating in the region.

Landon Derentz vice president, energy and infrastructure, senior director, and Morningstar chair for Global Energy Security at the Atlantic Council Global Energy Centre, said the short-term impact is likely to be less acute that the Iraq War.

“Energy analysts are now forecasting the potential for a 5% to 15% increase in the prices of crude oil when markets open on Sunday evening, placing international benchmark Brent crude oil in a range of $76-$84 per barrel.

“This would mean that even with a material disruption to global oil flows, prices are projected to remain $20 per barrel below the inflation-adjusted average during the Iraq War.”

However, he added: “A sustained disruption would not only test energy markets. It would also test political tolerance in Washington and among allied governments that are already sensitive to increasing pressures around energy affordability over the past year.

“As the price shocks of the 1970s demonstrated, higher prices can quickly translate into domestic political constraints.”

Nigel Green, chief executive of global financial advisory giant deVere Group, said: “Investors are now confronting a renewed inflation threat at a moment when price growth in major economies remains above or only just approaching central bank targets.

“When Brent jumps at this speed, inflation arithmetic changes quickly across developed economies.”

Green added that the Bank of England estimates that a 10% increase in the price of Brent crude typically adds around 0.2 to 0.3 percentage points to UK inflation. But he claimed the significance of that multiplier is being underestimated.

“A sustained move of this magnitude would materially lift headline CPI in the UK. Policymakers who believed inflation was moving steadily back toward target would face renewed pressure.”

Latest data from industry analyst Cirium revealed the extent of the disruption to airline operations following the US/Israeli attacks.

This below chart sets out cancellations by destination country to the Middle East as of 7am Eastern, 1pm CET, 14pm DXB for March 1.

A round-up of current flight cancellations by Middle Eastern carriers: 

Qatar Airways flight operations remain temporarily suspended due to the closure of Qatari airspace. Qatar Airways will resume operations once the Qatar Civil Aviation Authority announces the safe reopening of Qatari airspace. A further update will be provided on 03 March by 09:00 Doha time (06:00 UTC): https://www.qatarairways.com/press-releases/en-WW/262673-qatar-airways-service-update-02-march-2026/

Due to multiple regional airspace closures, Emirates has temporarily suspended all operations to and from Dubai, up until 1500hrs UAE time on Tuesday, 3 March: https://www.emirates.com/uk/english/help/travel-updates/

Saudia Airlines – Due to the evolving situation in the region and airspace closures, flights to and from Amman, Kuwait, Dubai, Abu Dhabi, Doha, Bahrain, Moscow and Peshawar have been cancelled. These cancellations are effective until 02 March at 23:59 GMT: https://www.saudia.com/travel-updates/202602281

The Middle East’s commercial aviation sector remains grounded for a third day with airspace closed and operations suspended at major airports: https://www.euronews.com/2026/03/02/us-and-israeli-strikes-on-iran-disrupt-regional-and-international-flights

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