The ongoing conflict with Iran has placed increasing pressure on the US economy over the past eight weeks, triggering higher fuel costs, renewed inflation concerns, and additional strain on consumers. Economists believe the financial impact may continue even if hostilities end soon.

Rising oil prices have been identified as one of the most immediate consequences of the conflict. Analysts noted that the economic damage has already taken hold, particularly because energy prices are unlikely to return to earlier levels in the near term.

The war has disrupted movement through the Strait of Hormuz, a critical shipping route that normally handles around one-fifth of global oil supply. As a result, crude prices have surged sharply. Brent crude, the international benchmark, was trading near $105 a barrel recently, marking an increase of roughly 44 percent compared with levels before the conflict began.

Economists said restoring oil production to prewar levels of 100 million barrels per day could take considerable time due to extensive damage to energy infrastructure across the Middle East.

Although forecasts suggest oil prices may ease later this year, many analysts expect them to remain above pre-conflict levels through 2026.

Senior economist Lydia Boussour of EY-Parthenon stated that a full return to normal conditions would likely take time, particularly in supply chains and energy production, with lingering effects from the war expected.

A White House spokesperson said President Donald Trump had previously acknowledged temporary disruptions resulting from Operation Epic Fury, the US military campaign against Iran. The administration maintained that the American economy remains on a stable path due to its broader economic agenda.

Officials also pointed to strong private-sector job growth in the March employment report, along with moderating core inflation and falling prices in selected categories such as beef, dairy, eggs and prescription medicines.

Price Pressures Likely to Persist

Economists expect inflation data for April to remain elevated and believe price pressures could persist through 2026. The Consumer Price Index rose 3.3 percent annually last month, the highest reading since May 2024, driven largely by energy costs.

Another closely watched inflation measure, the Personal Consumption Expenditures price index, could reach 4 percent by year-end, according to Scott Lincicome of the Cato Institute. That would be double the Federal Reserve’s long-term target of 2 percent.

Analysts noted that consumers would prefer falling prices, but such relief is unlikely in the near future, with costs expected to remain above desired levels.

Economic Expansion Faces Headwinds

Higher energy expenses may also reduce consumer spending, which accounts for a major share of US economic activity. Any pullback in household spending could slow growth in the months ahead.

EY-Parthenon chief economist Gregory Daco projected that the war could trim US GDP growth by 0.3 percentage points this year, bringing annual expansion to 1.8 percent. That would represent a slowdown from the 2.1 percent growth pace recorded in 2025.

Boussour added that weaker job conditions and slow wage growth could further limit purchasing power and contribute to softer demand.

Consumer spending has remained relatively resilient since the war began, though Bank of America data suggests much of that strength is being driven by higher-income households. Those consumers have benefited from stock market gains, with markets continuing to reach record highs despite broader economic concerns.

Consumers Bear the Rising Costs

For many households, the clearest financial pressure has emerged at gas stations. Average fuel prices in the US have climbed by more than $1 per gallon since the conflict started due to global supply shortages. According to AAA, the national average stood at $4.06 per gallon recently.

Under more optimistic projections, prices could fall closer to $3.50 by the end of the year, though that would remain above the prewar average of $2.98.

Summer travel has also become more expensive, as airlines raise fares and introduce baggage fees to offset rising jet fuel costs, which have increased by more than $2 per gallon.

Economists warned that higher diesel prices may soon spread the burden further by increasing transportation costs for goods, leading to more expensive groceries and retail products.

It was noted that nearly all goods moved by truck are likely to become more costly, affecting everything from food items to online deliveries.

Food inflation may also intensify as fertilizer production faces disruptions. Fertilizer relies heavily on natural gas, supplies of which have tightened because of the conflict. The International Energy Agency said in a recent report that global natural gas supplies are expected to remain constrained for the next two years.

While wholesalers, distributors and retailers may absorb part of the increased costs, analysts said at least some of the burden is likely to be passed on to consumers.