US-Iran Tension: A US–Iran war would push up oil, fuel, food, shipping and travel costs worldwide, triggering inflation and market turmoil far beyond the battlefield.
Oil tankers pass through the Strait of Hormuz, a key global energy chokepoint vulnerable during Middle East conflicts (Photo: File)
Iran-US Tension: A direct military confrontation between the United States and Iran would not be limited to the battlefield and its economic impact would spread rapidly, affecting fuel prices, grocery costs, flight tickets and financial markets around the world. History shows that even small conflicts in the Middle East can drive up costs quickly with a full-scale clash would increase that effect many times over.
Oil would be the immediate casualty and Iran sits astride the Strait of Hormuz, a narrow waterway through which about 20% of the world’s oil supply passes daily with any threat to this route would spook markets instantly. Analysts warn that crude prices, currently far below crisis levels, could surge beyond $120 per barrel with extreme scenarios pushing prices closer to $150 if infrastructure or shipping is disrupted. Even brief disruptions tend to cause sharp spikes, as seen during past Middle East escalations.
The Strait of Hormuz carries about 21 million barrels of oil per day, nearly 20% of global consumption, making it the world’s most critical energy chokepoint such a blockade would cut off energy exports to Asia and Europe, creating a massive supply shortage. Investors would dump risky assets, wiping billions off stock exchanges in New York, London and Tokyo.
Higher crude prices quickly translate into more expensive gasoline, diesel, heating fuel and in oil-importing economies, this feeds directly into household budgets. Petrol prices typically respond with a delay of three to four weeks, but once they move, the rise is often steep. In Europe and parts of Asia, higher oil prices also lift electricity and heating costs where natural gas markets are tightly linked to global energy benchmarks.
The Persian Gulf is not just an oil corridor with a major artery for global trade and a conflict would push shipping insurers to raise premiums sharply, while vessels reroute to avoid high-risk zones. These detours add time and cost. Freight analysts estimate global shipping rates could rise 30 to 50%, making everything from electronics to machinery more expensive by the time it reaches consumers.
Transport costs ripple through the economy when fuel and freight become more expensive, food prices follow where agricultural imports, packaged foods and everyday consumer goods all carry higher logistics costs. For developing economies, where food and fuel form a large share of household spending, the inflationary impact would be especially severe, potentially triggering social and political pressure.
Airlines would face immediate disruption, airspace closures, rerouted flights and higher jet fuel prices would push ticket prices higher while routes connecting Europe, Asia and the Middle East would be most affected. Tourism-dependent economies could see a sharp drop in arrivals, compounding economic strain already felt in other sectors.
Markets dislike uncertainty and war delivers it in abundance where global stock markets would likely see sharp sell-offs as investors flee risk on sectors such as aviation, shipping and manufacturing tend to suffer first. At the same time, safe-haven assets usually rally. Gold prices often surge during geopolitical crises while the U.S. dollar strengthens, making imports more expensive for emerging economies and increasing debt burdens.
Countries heavily dependent on imported energy, including India and much of Southeast Asia, would feel the pain quickly through widening trade deficits and higher inflation. If the conflict drags on, central banks may be forced to pause or reverse interest rate cuts to control price pressures. The longer the disruption lasts, the more deeply it embeds itself into everyday costs, long after the headlines fade.
