As fighting escalates between the United States and Iran, the most immediate concern is the human toll — with troops deployed and civilians caught in the crossfire. So far, six U.S. service members have been killed, while the Iranian civilian death toll has climbed to more than 900 people, including at least 181 children under the age of 10, according to the U.S.-based Human Rights Activists News Agency.
But geopolitical conflicts can create ripple effects that extend beyond those on the front lines and spread quickly through the global economy. Energy markets have already reacted, sending oil prices higher amid fears that the conflict could disrupt global supply, particularly shipments through the Strait of Hormuz, one of the world’s most important oil chokepoints.
Here’s what to know about how rising tensions could affect your wallet.
Gas prices could rise first
Brent crude oil — which influences the cost of everything from gasoline to jet fuel — surged past $100 a barrel on March 8, marking the highest level since the oil price spike following Russia’s 2022 invasion of Ukraine.
This climbing cost has already started hitting drivers. The national average gas price is now roughly $3.45 to $3.48 per gallon — about 50 cents higher than a week ago, when prices were around $3.00, and well above the roughly $2.90 level seen a month ago, according to AAA.
In a social media post, President Trump dismissed the rise in energy costs, calling it a “very small price to pay.”
Last week’s market reaction was also unusually sharp. Ernie Tedeschi, the former chief economist at the White House Council of Economic Advisers, told Katie Couric Media that oil prices jumped 4.7 percent in a single day — a move that ranks among the largest daily increases since 1985.
Whether this ultimately pushes broader inflation higher depends largely on how long oil prices stay elevated. “For oil price increases to mechanically move the needle on inflation, the price increases need to be sustained for a few weeks,” Tedeschi explains.
Oil markets are famously volatile, and prices can swing quickly as geopolitical events evolve. Still, the fact that gasoline prices have already risen suggests retailers are beginning to pass higher crude costs on to consumers, rather than assuming the spike will disappear immediately.
Airfare and shipping could get more expensive
Airlines are especially sensitive to fuel costs because jet fuel is one of their largest expenses, second only to labor. It typically accounts for about 20 to 30 percent of operating costs, meaning when oil prices rise, airline profits can quickly get squeezed.
Higher fuel costs often get passed along to travelers in the form of more expensive tickets. Reuters reports jet fuel prices have climbed about 15 percent since the war began, and some airfares are already surging. For example, a direct Korean Air flight from Seoul to London on March 11 was listed at $4,359, up from $564 just a week earlier, according to Google Flights.
“When fuel prices rise, transportation costs rise with them,” explains Rachel Ziemba, a geoeconomics and energy markets expert and founder of the advisory firm Ziemba Insights. “That can translate into higher jet fuel costs and potentially higher airfares.”
Still, Tedeschi tells us it’s too early to know how much the war will ultimately affect airfares overall — even if higher fuel prices persist. Historically, sustained increases in oil prices take about six to 12 weeks to show up in airline fares, Tedeschi says. “We’re not at ‘sustained’ yet,” he noted. “Markets would need to become more confident that oil prices will remain elevated.”
And it’s not just air travel: Higher fuel prices can also trickle into shipping fees. Major carriers often adjust their rates to account for rising costs of moving products around the world, which can ultimately show up when you're shopping online.
The inflation ripple effect
Energy is one of the fastest channels through which geopolitical shocks move across the economy.n When fuel costs rise, it becomes more expensive to move almost everything — from groceries to construction materials to consumer goods. Higher transportation costs ripple through the economy and eventually show up in what businesses and consumers pay.
Fuel is also deeply embedded in the food system, according to Ziemba. Crops are harvested with diesel-powered equipment, transported by trucks and ships, and often processed in energy-intensive facilities. When fuel prices rise, those increases can eventually reflect in grocery bills.
Oil shocks can also rattle financial markets. When energy prices surge, investors often worry about inflation and slower economic growth — a combination that can negatively impact stock markets.
A sustained energy spike could also complicate the Federal Reserve’s plans to cut interest rates. Rather than forcing rate hikes, Tedeschi says higher energy prices are more likely to delay potential rate cuts by keeping inflation elevated for longer.
Still, some policymakers say the conflict hasn’t changed their outlook yet. Federal Reserve Governor Stephen Miran said March 4 that he still believes interest rate cuts are appropriate this year and that the Iran conflict hasn’t altered his forecasts for inflation or the labor market.
Why the Strait of Hormuz matters
Much of the concern centers on the possibility that the conflict could disrupt shipping through the Strait of Hormuz — the narrow waterway between Iran and Oman that carries roughly 20 percent of the world’s oil supply.
Since the conflict began on Feb. 28, normally heavy tanker traffic through the strait has slowed to a crawl, according to Ziemba.
Iran itself accounts for less than 5 percent of global oil production, but its location next to the strait gives it outsized influence over one of the world’s most critical energy bottlenecks.
And even though the U.S. now produces more oil than any other country, gas prices here are still tied to the global market. That means disruptions — or even the threat of disruptions — anywhere in the world can push prices higher for American drivers.
“The United States is a net energy exporter, so there are no immediate supply shortages likely here,” Ziemba says. “But these are global markets and global prices, so Americans are more likely to feel this through higher prices.”
For now, the biggest question is how long tensions in the region will last. A brief spike in oil prices might only cause temporary bumps at the pump. But if disruptions escalate — especially around the Strait of Hormuz — the effects could spread far beyond gasoline, pushing up airline tickets, shipping costs, and the price of everyday goods.
