ICSM Business News: as war breaks out in the Middle East - the knock-on for British business is already happening with energy hikes, airline cancellations and ships avoiding the Red Sea

By Harry Mottram: British businesses and manufacturers are bracing themselves for hikes in fuel costs after Iran, Israel and the USA became locked in a deadly war. Following the American and Israeli attacks on the government of Iran the conflict has quickly escalated in the last few days with Iranian missiles and drones attacking oil tankers, infrastructure and civilian buildings in several countries in the Gulf. Saudi Arabia, Oman, Dubai, UAE, Bahrain, Kuwait, Jordan and even Cyprus in the Mediterranean Sea have all been hit by Iranian counter attacks sending columns of smoke above ships, hotels, airports, military bases and oil and gas installations.

The sight of these actions and the scenes of chaos at airports in the region as airlines pull their services has sent shock waves around the world hitting stock markets and business confidence.

Main knock-on effects:

Oil and gas prices up by 10% and likely to go higher. That will drive up costs for heating and transport. Households are protected for now but if the conflict continues for longer than a few days then all bets are off. Those of us of a certain age will recall how past wars in the Middle East – 1973 October War, both Iraq Wars – has seen hikes in prices. With some shipping now avoiding the Red Sea - sailing around South Africa will only increase costs.

Interest Rates and Inflation are currently on a slightly downward trend but that could easily change if oil prices rising forces inflation up. Initially things will be fine but if the conflict lasts for weeks that will change and then industry, retail and hospitality will be hit as consumers have less money to spend.

Holidays and Travel: With EasyJet pulling their flights to the Middle East and hundreds of thousands of UK citizens and those of other nations stranded in the Gulf states there is nervousness in the travel industry. Confidence in hospitality in the countries affected will take time to recover – and there will be a reluctance of many to fly at all for a time if there are acts of associated terrorism.

Governments nervous of Trump. The President of the USA has been increasingly unpredictable with his fondness for tariffs and threats to friendly countries. His actions have created a feeling that the American Government no longer has the confidence of its main allies such as the UK, Canada, Germany and other European states. That’s bad news for international trade as wars are one thing that sends economies into a spin.

Ian Carrotte of ICSM said the situation is changing by the day so it is too early to say the war between Israel and the USA against Iran will cause an economic downturn. However, if as the President of the USA said the war will last four weeks then industry will become increasingly concerned and pressure will mount on the three countries in a state of war to pull back and declare a ceasefire.

The image is from the BBC News coverage of the war on March 2nd, 2026.

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