Like all nations, Wales is not immune from global developments.
In February 2026, then First Minister, Eluned Morgan MS, warned of the Iran conflict’s “ripple effects” in Wales. Within a fortnight, she’d said “the impact is real and it’s happening already”.
This article follows on from two articles covering the previous Welsh Government’s initial response and on steps it was taking in areas like civil contingency planning and working with other governments.
Domestic effects
The uncertainty around the length and severity of the conflict, and how this will impact on global energy supply and trade, make it hard to anticipate future impacts on two of the most significant effects of the war in Wales - inflation and the cost of living.
Cost of living
The Bank of England has suggested a range of potential economic scenarios, which depend on the scale of the energy price shock, and on how this impacts inflation through increased prices and wages. These range from a relatively short-term energy price shock to a large and persistent shock with more severe economic effects.
The British Retail Consortium says food retailers are “absorbing significant additional costs from the conflict”, and that these “pressures will inevitably filter through to the till over the coming months”. The Food and Drink Federation estimates that food price inflation will be at 9-10% by the end of 2026, with food prices already nearly 40% higher than in early 2020.
On 19 May, the Financial Times reported that the UK Treasury had urged supermarkets to limit food prices but Treasury Secretary, Dan Tomlinson, said the next day that supermarkets would not be forced to cap prices.
Energy bills
In a factsheet on Iran, the Middle East, and UK energy, the UK Government warns that energy bills could increase after the UK’s energy price cap of £1,641 a year expires on 30 June. The cap had dropped by £117 in the preceding three-month period. However, based on average predictions from three major energy suppliers, Money Saving Expert predicts that the next price cap will rise by approximately 13%, up to £1,853. Official figures will be announced on 27 May.
Off-grid fuels are not protected by the cap, so rural areas like Ceredigion and Powys, where the percentages of off-grid households are highest, are particularly affected. Around 100,000 (7%) of households in Wales rely on heating oil, the price of which has almost doubled over the last couple of months, leading to constituents reaching out to Members before May’s election.
The previous Welsh Government urged those with concerns to contact its free Nest energy advice service for help. It said this service can also signpost to other help such as Welsh Government’s Discretionary Assistance Fund and the Fuel Bank Foundation who provide one off payments for fuel for those in need.
It later announced specific support. Households in receipt of Council Tax Reduction Scheme support that use heating oil or LPG to heat their home are eligible for a £200 payment. Other households who use heating oil or LPG can apply to the Discretionary Assistance Fund for support if they are in severe financial hardship, with the maximum support available having increased from £500 to £750 and restrictions changed to allow people to apply up to twice in a 12-month period.
Fuel prices
The UK Government publishes road fuel prices on its website every week.
On 18 May, a litre of diesel cost £1.87 on average, compared to £1.42 before the conflict started (a 32% increase). Similarly, a litre of unleaded cost £1.57 on 18 May, compared to £1.32 before the conflict (a 19% increase).
The BBC has reported a 62% increase in UK fuel thefts, including three fuel thefts in six weeks at a garage in Gwynedd.
The Prime Minister paused plans to increase fuel duty by 5p per litre because of the conflict earlier this week. The reduced rate, introduced in response to Russia’s 2022 full-scale invasion of Ukraine, will remain in place until the end of the year.
People returning and seeking safety
The previous Welsh Government was particularly concerned for the safety of Welsh people and Welsh Government staff in the region.
At the beginning of March 2026, there were 300,000 British nationals across Iran and the wider region, including residents, families, holidaymakers and others. The UK Government confirmed it was sending support teams to help those who needed to leave and was “exploring all options for helping our citizens return home as swiftly and safely as possible”. By 17 March, the number of British nationals flying back from the region since the start of the war, which began on 28 February, reached 100,000.
The UNHCR (the UN Refugee Agency) reported in March that 3.2 million people had been temporarily displaced within Iran because of the conflict. Unlike other conflicts in the region, such as in Syria, and in Afghanistan, the UK Government has not created a special route for Iranian refugees to come to the UK. It has pledged £15 million for vulnerable people affected by Middle East conflict.
The National Crime Agency has warned that more people may try to reach the UK. In March 2026, the Migration Observatory published analysis showing that, over the last 10 years, Iranians were the most common nationality among asylum seekers in the UK.
Senedd prepares by passing housing legislation
In March, the Senedd passed legislation to make it easier for arrivals from the region to access homelessness assistance and housing if the Foreign Office issues an evacuation order. Eligible persons are British nationals or persons, subject to immigration control, who have been given leave to enter or remain in the UK with access to public funds. The move brought Wales into line with UK arrangements.
The Allocation of Housing and Homelessness (Eligibility) (Wales) (Amendment) Regulations 2026 came into force on 30 March 2026 for one year. The changes are limited to applications received within six months of the date of the evacuation order, or from the first day of an evacuation, whichever is later. To date, no evacuation order has been issued.
The previous Welsh Government took similar action in response to Russia’s full-scale invasion of Ukraine and the Israel-Gaza conflict.
Important choices for the new Welsh Government and Senedd
While there have been some signs of abatement, the conflict, now in its third month, continues to have serious and long-reaching effects.
Rhun ap Iorwerth MS became First Minister on 12 May 2026. In his capacity as Leader of Plaid Cymru before then, he’d called for a parliamentary veto on any UK military involvement in Iran on two occasions, in June 2025 and in March 2026. He also signed a Senedd Statement of Opinion on protests taking place in Iran earlier this year, which received cross-party support from 27 of 60 Members.
How the First Minister balances his international priorities with the US, a significant international partner for Wales, will be a key factor in his approach. Of the states involved in the conflict, it is by far Wales’ largest trading partner with goods traded in 2025 worth £6.6bn (almost 17% of the total value of Welsh goods traded internationally). The US has also consistently been amongst our largest sources of inward investment for over a decade and the Welsh Government has historic links in place, such as its five US offices.
The new Welsh Government and Senedd have important choices to make on their responses to international developments that will have real life consequences. As the Senedd gets up and running after the election, we will publish updates as the situation unfolds.
Article by Sara Moran, Claire Thomas and Gareth Thomas, Senedd Research, Welsh Parliament
