Renewed conflict involving Iran has once again pushed the Middle East to the forefront of global attention. Large-scale US and Israeli strikes on Iranian military and nuclear targets have triggered retaliatory missile and drone attacks across the region, raising fears of a broader regional war. For organisations with employees across the Middle East, the implications are immediate, from disrupted airspace and heightened security risks to volatility in global energy markets.

The latest escalation follows last year’s confrontation between Iran and Israel, when an exchange of airstrikes, missile attacks and drone launches – alongside US strikes on Iranian nuclear facilities – briefly pushed the region to the brink of a wider conflict. At the time, a US-brokered ceasefire appeared to stabilise the situation, but the truce remained fragile and underlying tensions remained unresolved.

The events now unfolding underline how quickly that fragile stability can unravel. For global mobility teams, the priority is understanding how developments may affect employee safety, travel disruption and assignment costs, and ensuring contingency plans are ready should the situation deteriorate further.

Security and travel disruption affecting assignees

For organisations with employees in the Middle East, duty of care remains the immediate priority.

The potential for escalation has long been reflected in our Location Ratings scoring for countries such as Iran and Israel. However, the current conflict has created additional operational challenges, particularly around travel and airspace access.

One of the most immediate impacts has been disruption to international flights and regional airspace. Routes may be suspended or rerouted as conditions evolve, complicating travel plans for expatriates and business travellers. Organisations should ensure crisis management procedures are up to date, including clear communication channels with employees and contingency planning for evacuation or relocation if necessary.

In situations like this, employee safety and wellbeing should remain the primary focus. Financial responses such as increasing location allowances are often less appropriate in rapidly evolving crises, particularly when conditions may change quickly.

We will continue to monitor developments closely, and the next quarterly update to ECA’s Location Ratings in mid-May will reflect changes in living conditions for expatriates, including any increased security risks.

Energy market volatility and cost of living pressures

Alongside the security implications, the conflict is also affecting global economic conditions. Energy markets have reacted quickly, with crude oil prices rising amid concerns about disruption to shipping routes through the Strait of Hormuz – a critical transit point for global oil supplies.

If sustained, higher energy prices are likely to have both immediate global effects and more localised regional impacts.

In the short term, rising oil and gas prices typically translate quickly into higher petrol and utility costs worldwide. If these increases persist, they can contribute to broader inflationary pressure across many economies.

Over time, higher energy prices also feed through into global supply chains. Rising fuel costs increase transport, manufacturing and distribution expenses, which can gradually push up the price of goods and services.

In addition to these global effects, the conflict may also create more targeted regional pressures depending on how shipping routes and energy supply chains are affected. Countries that rely heavily on imports passing through the Strait of Hormuz may face increased costs or logistical disruption.

Within the Gulf region itself, immediate shortages are unlikely. Many countries have strong infrastructure, strategic reserves and established import supply chains. However, prolonged disruption to shipping routes could increase import costs and delivery times. Outside the Gulf, major Asian energy importers such as India, Japan, China and South Korea are particularly exposed to disruption in the Strait of Hormuz.

Currency volatility is another factor being monitored, as exchange rate movements can affect the cost of imported goods and services.

If the conflict persists or escalates, inflationary pressures could broaden globally. However, past conflicts suggest the impact may be gradual rather than sudden, as supply chains adapt through diversification and rerouting. ECA is currently conducting our March cost of living survey and any price changes will be reflected in the next data release in May.

Housing considerations

Geopolitical instability can also influence housing decisions for expatriates.

Security incidents affecting commercial districts or transport hubs can change perceptions of safety across different parts of a city. As a result, organisations may increasingly favour accommodation in secure residential compounds or serviced apartments with enhanced security measures. These shifts can increase accommodation costs and may affect housing availability in locations previously considered highly stable.

At the same time, political uncertainty can influence property markets more broadly, potentially affecting rental supply and pricing trends in major Gulf cities.

Mobility teams may therefore need to review housing assumptions within assignment policies and ensure accommodation arrangements meet appropriate security standards.

Mobility policy implications

Periods of heightened geopolitical risk can also require operational adjustments to mobility programmes.

Travel disruption may affect assignment start dates, while evacuation planning or temporary relocation could increase demand for short-term accommodation such as hotels or serviced apartments.

Mobility teams may also need to reassess elements of assignment policies – including housing assumptions, hardship considerations and travel planning – as the situation evolves.