The ongoing conflict in Iran could have far-reaching impacts on the economy, experts have warned.
Over the weekend, the U.S. and Israeli militaries launched a series of coordinated strikes against Iran and killed the nation’s supreme leader, Ayatollah Ali Khamenei. Iran has since launched retaliatory strikes in the region, and four U.S. service members have been killed as of Monday.
The operation is projected to last “four to five weeks,” President Donald Trump told reporters Monday. Now, experts say consumers could see significant economic impacts, including rising gas prices.
”The cost of U.S. goods, as well as goods from other countries, will rise,” Mayra Rodriguez Valladares, managing principal at the consulting firm MRV Associates, told The Independent.
“The conflict has already put upward pressure on oil and natural gas. In turn this will put pressure on global inflation at a time that inflation has already been quite elevated. Rising energy prices impact all kinds of transportation, chemicals, fertilizers, and food prices,” she added.
Gas prices are expected to rise — after Trump touted his work to slash energy prices
Experts expect gas prices will rise as the conflict continues.
Tom Kloza, an adviser to Gulf Oil, told CNN he estimates retail gas prices could rise 5 to 10 cents a day for some time. Patrick de Haan, the head of petroleum analysis at GasBuddy, expects prices could even reach $3 per gallon by Monday night.
“With prices cycling in major states, the national average is now up to $2.96/gal. I believe we may see it touch $3/gal later tonight as the jump in prices begins to show up at more stations,” he wrote on X.
Lowering gas prices has been a top priority for Trump, who touted his administration’s work at an event in Corpus Christi, Texas, just hours before the strikes began.
“Slashing energy costs is among the most important actions we can take to bring down prices for American consumers,” Trump said Friday.
When oil prices rise, “every part of the economy is hurt,” Valladares said.
“Additionally, until oil prices decline, it makes it very difficult for central banks like the Federal Reserve to lower interest rates,” she explained. “This makes it more expensive for borrowers who have credit cards or who are trying to qualify for mortgages, student and auto loans, or any debt.”
Instability in the region may also lead to “more general panic amongst investors,” Dr. Jonathan Snow, an associate professor of political science and assistant dean of the School of Education, Government, and Society at Roanoke College, told The Independent.
When reached for comment, White House Press Secretary Karoline Leavitt said the Trump administration’s policies “have led to the highest production of U.S. oil ever with even more oil from our newfound market and agreements with Venezuela.”
“The Departments of Energy and Treasury will continue to monitor oil markets and do everything possible to keep prices stable,” she said in a statement to The Independent.
Fertilizer disruption could lead to rising food prices
The conflict with Iran could also have long-term impacts on food prices. That’s because the Gulf region is one of the world’s biggest suppliers of nitrogen fertilizer, which is crucial to the global food chain.
If there’s less nitrogen fertilizer available, that could mean lower crop yields in the coming months, leading to a smaller inventory and higher food prices, according to Forbes.
The timing for the fertilizer industry “literally could not be worse,” according to Josh Linville, vice president for fertilizers at the financial services firm StoneX Group.
“There is never a good time for war, but this couldn’t be much worse,” Linville told Bloomberg.
Costs were already high before the latest strikes, and farmers in the Northern Hemisphere are set to start applying fertilizers to their crops, Bloomberg reports. Supplies of urea — a widely-used nitrogen fertilizer — were already down, and a recent drone strike that damaged a Russian nitrogen plant has sparked concern, according to the outlet. Russia is one of the biggest urea suppliers to the U.S., along with Qatar.
Shipping impacted in the Strait of Hormuz
The ongoing strikes are impacting traffic in the Strait of Hormuz, a crucial shipping route off Iran’s southern coast.
Some major shipping companies have suspended operations in the Strait of Hormuz, while certain marine insurers are canceling war risk coverage in the region, CNN reports. This could lead to skyrocketing shipping rates, according to the network.
“I don’t think Iran can shut down the Strait of Hormuz, but insurance companies and vessel operators can,” Kloza told CNN.
About one-quarter of globally traded nitrogen fertilizer also moves through the Strait of Hormuz, further sparking concern about the conflict's impact on food production, Forbes reports.
The Independent has contacted the White House for comment.
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