How the Iran War Is Expected to Affect US Prices, From Gas to Flights
A driver refuels a tractor trailer with diesel fuel at a Chevron truck stop in Tracy, California, on 25 March 2026. This image captures the escalating fuel crisis as the US-Israel war on Iran enters its fifth week, severely disrupting global oil shipments through the Strait of Hormuz. The closure of this critical waterway has triggered widespread shortages, forcing nations to implement drastic conservation measures. Even if a peace deal is brokered imminently, experts warn that unwinding the economic damage could take months, with profound implications for American consumers already grappling with soaring living costs.
Oil and Gas: A Surge at the Pump
The average cost of gasoline in the United States has surged by approximately 30% over the past month, reaching a national average of $3.97, the highest level since 2023. Diesel prices have climbed even more sharply, increasing by about 50% or $1.69 compared to a year ago, according to data from AAA. This spike is particularly concerning as diesel powers the majority of trucks that transport goods across the country. Higher transportation costs are poised to inflate grocery prices, given that roughly 85% of agricultural products rely on trucking for distribution.
Alex Jacquez, chief of policy and advocacy at the progressive policy group Groundwork Collaborative, explains that the impact of oil and gas shortages can be divided into first-order and second-order effects. First-order effects are direct, such as elevated prices at fuel stations. Second-order effects are indirect but broader, potentially raising costs for crops, semiconductor chips, and medical devices as disruptions cascade through supply chains. Jacquez notes, "It's just a matter of when they work their way through the supply chains. Maybe it's on next month's orders, or maybe next week's orders. But eventually, some of these increases we've seen are going to get passed through, if they get large enough."
Fertilizer: A Blow to Farmers
As the spring growing season approaches, American farmers are facing significant challenges due to rising fertilizer costs and declining commodity prices. A third of global urea trade, a solid nitrogen fertilizer, passes through the Middle East, with about 20% of US imported fertilizer originating from Qatar. Nitrogen fertilizer is essential for corn cultivation, which involves around 500,000 farmers nationwide, according to the National Corn Growers Association.
The White House has acknowledged these pressures, with Kevin Hassett, director of the National Economic Council, assuring that the US economy would not be severely disrupted by supply issues. In a recent CNBC interview, Hassett stated, "Donald Trump has a plan for every corner of the disruption, from fertilizer to getting fuel to the west coast." He added that the administration has been actively sourcing alternative fertilizer supplies globally, claiming success in securing "a lot of it" to minimize disruptions.
Helium and Jet Fuel: Broader Economic Ripples
The conflict has also disrupted the global helium supply after Iranian attacks in Qatar, the world's second-largest helium producer. Production halts at the Ras Laffan industrial complex, which supplies about 20% of global liquefied natural gas, threaten key imports used in aerospace, MRI machines, and semiconductor chips for AI technology.
Increases in oil prices are further driving up airfare and shipping costs. Jet fuel prices have doubled since the war began, according to the International Air Transport Association. United Airlines announced flight reductions last Friday due to soaring fuel expenses, with CEO Scott Kirby noting, "Jet fuel prices have more than doubled in the last three weeks. If prices stayed at this level, it would mean an extra $11bn in annual expense just for jet fuel." An analysis by Deutsche Bank confirms that average airfares across airlines have risen compared to last year.
Mortgage Rates: Housing Market Headwinds
Just as US mortgage rates showed signs of easing in February, providing relief to home buyers and sellers, the average 30-year fixed mortgage rate climbed to 6.22% last week, its highest level in months. Mortgage rates are closely linked to the broader economy, influenced by interest rates set by the US Federal Reserve. Last week, the Fed opted to maintain rates between 3.5% and 3.75%, citing economic uncertainty exacerbated by Middle East tensions.
Joel Berner, a senior economist at Realtor.com, commented, "Rising mortgage rates are a major barrier to what should otherwise be a very favorable spring homebuying season. Ultimately, the current upward pressure on mortgage rates, stemming from the war and inflation fears, serves as the primary barrier preventing the spring housing market from capitalizing on otherwise favorable inventory and price conditions."
This multifaceted crisis underscores how geopolitical conflicts can permeate everyday life, from fuel pumps to supermarket shelves and beyond, straining American households already burdened by high housing, grocery, and healthcare costs.
