Washington — The US and Israeli attacks on Iran add more question marks over the US economy, which is already suffering from intermittent and weak tariffs. Employmentand Ongoing inflationary pressures.
The war has already broken out High oil prices Prices at gas stations could rise as early as this week, but the ultimate impact on the economy and inflation will depend on the length and intensity of the conflict, economists say. If the crisis ends within a week or two, its economic effects will be minor and short-lived.
However, a longer-term war that pushes oil above $100 per barrel for an extended period would worsen inflation, at least temporarily, while slowing growth and intensifying inflation. The misery of Americans With the cost of necessities. After nearly five years of rising prices, concerns about affordability have undermined President Donald Trump’s support in the polls and that of Democrats in recent elections.
Currently, the price of a barrel of benchmark US crude oil rose 6.3% on Monday to settle at $71.23. Brent crude, the international standard, rose 6.7% to $77.74 a barrel. Economists said that an increase at this level, even if it continues, will only push up inflation.
“While cost-conscious Americans dealing with an affordability crisis will not take this increase lightly, such an increase would not materially impact economic growth,” said Joe Brusuelas, an economist at consulting firm RSM.
Stock prices rebounded to show Small gain Monday after an initial sharp decline, a sign of optimism that the war will be short-lived.
But a longer-term conflict, especially one that has closed the Strait of Hormuz on the edge of the Persian Gulf, through which nearly 25% of the world’s oil passes, could push oil prices past $100 a barrel. U.S. gas prices could then reach $3.50 a gallon, up from just under $3 on a nationwide average on Monday.
Economists said such price jumps would accelerate inflation in the United States and slow growth.
“Markets are currently underestimating the risks involved in the ongoing engagement and process that does not end quickly, restoring travel through the Strait of Hormuz and getting everything back to calm and back to normal in due course,” said Alex Jaquez, head of policy and advocacy at Groundwork Collaborative and a White House economic adviser under Biden.
Here are some ways war can affect the economy.
While some measures of inflation have slowed in recent months, the Fed’s preferred measure has been stuck at around 3% for about a year. This is higher than the central bank’s target of 2%, and has occurred even as gas prices decline steadily in 2025.
If gas prices rise significantly, airfare prices may also rise as airlines face greater fuel costs. Shipping will also become more expensive, which could increase grocery prices.
Natural gas prices also jumped on Monday, as nearly 20% of the world’s gas passes through the Strait of Hormuz, and a liquefied natural gas plant in Qatar was closed. This could raise heating prices in the United States. The cost of natural gas has already risen 10% in the past year, thanks in part to rising energy use by data centers powering artificial intelligence.
However, economists have pointed out that the US economy is no longer as dependent on oil as it was in the past, with most Americans now working in services, rather than manufacturing.
Other factors may help keep oil price increases relatively limited. Rory Johnston, founder of Commodity Context, an oil analysis company, noted that oil inventories were very high before the conflict, which helped keep prices in check. This contrasts sharply with the winter of 2022, when post-coronavirus supply chain problems sent oil costs soaring even before the Russian invasion of Ukraine caused a much larger rise, he said.
Johnston said Monday’s increase “represents a very small increase compared” to what happened after the Russian invasion.
If the war with Iran continues for several months, it could also torpedo business confidence, which could prompt companies to invest and hire less, said Kathy Posjancic, chief economist at Nationwide Financial.
“When there is a new infusion of uncertainty into the business environment… it is a blow to confidence,” she said.
The result may be similar to the impact of Trump’s tariffs, which did not raise prices as much as many economists feared, but appear to have affected job gains. Employment in 2025 was the weakest, outside of a recession, since 2002.
Even without a significant rise in inflation, the main risk facing Trump is Americans’ dissatisfaction with his economic leadership.
According to polls, Americans already have a bleak outlook on the economy, largely due to the lingering effects of rising prices in the past five years. Trump’s attempts to portray the United States as if it were living in a “golden age” had little impact on these positions.
Jaquez said the protracted conflict in Iran, which has led to higher gas prices, is likely to make matters worse.
“People generally don’t think President Trump is focused on the things they’re focused on, and what they want him to focus on is grocery prices. What they think he’s focused on is things like tariffs and foreign policy,” Jaquez added.