Experts warn U.S.-Iran war could hit Americans’ wallets

WASHINGTON (Gray DC) - Economists and trade experts say the U.S. war with Iran could drive up the price of nearly everything, from consumer goods and food to transportation and manufacturing as disruptions to global oil supply ripple through the economy.

Crude oil prices surpassed $100 a barrel for the first time in nearly four years after the conflict brought oil tanker traffic to a near standstill at the Strait of Hormuz, a narrow sea passage along Iran’s southern border through which about 20% of the world’s oil supply flows.

Kislaya Prasad, the academic director of the Center for Global Business at the University of Maryland, said the disruption was triggered by the threat of attacks on shipping vessels.

“There was a risk that those ships would come under attack from Iran,” Prasad said. “And as soon as it seemed to become a reasonable possibility, insurers like Lloyd’s of London refused to insure the ships going through, and that basically stopped traffic in its tracks.”

He added that the near-shutdown of the passage has severely limited supply, causing oil prices to spike.

Because of the central role oil plays in the global economy, analysts said the conflict could constrain economic growth and raise the possibility of stagflation, a condition in which the economy stagnates while inflation rises.

Prasad said the combination of high costs and rising energy prices presents a compounding risk.

“If the economy’s not doing well because of high costs, tariffs, a variety of things, but at the same time the rise in the price of energy is forcing the price of things to go up — the combination of those two is particularly bad,” he said.

Michelle Schulz, founder of Schultz Trade Law, said the effects would be widespread across industries.

“Oil and gas shipments are particularly important because they impact so many industries,” said Schulz. “Those prices are going to go up and they will make other prices go up. It really trickles down to everything.”

The war has already been impacting Americans at the gas pump, with the national average price of a regular gallon of gasoline rising by about 40 cents over the past week to approximately $3.50, according to GasBuddy.

“It’s been a really long time in America since we have seen a price point increase so rapidly in just a matter of days,” said Matt McClain, GasBuddy petroleum analyst. “Unfortunately, the bad news is we are not done yet. We’ve got more to go this week — some 20 to 50 cents more per gallon on average across the country.”