Economists warn the Iran war’s pressure on oil, gas and supply chains could keep U.S. prices elevated into 2026.
The Iran war has already left a visible mark on the U.S. economy, and economists say the financial effects may last well beyond any near-term end to the fighting.
Eight weeks after the conflict began, gas prices have climbed above $4 a gallon, inflation has reached its highest level in nearly two years and higher energy costs are starting to ripple through travel, shipping and consumer goods. The central uncertainty is how quickly oil production, shipping routes and related supply chains can recover.
Brent crude, the international oil benchmark, was trading at $105 a barrel as of midday Friday, up 44% from before the war began, CBS News reported. The increase follows disruptions through the Strait of Hormuz, a critical waterway that normally handles about one-fifth of the world’s oil supply.
Mark Zandi, chief economist at Moody’s Analytics, told CBS News the energy shock is unlikely to unwind quickly. “I think the damage has already been done, in part because there’s no going back on oil prices, at least not any time in the near future,” he said.
The most immediate pressure has been at gas stations. The national average price for regular gasoline was $4.06 a gallon Friday, according to AAA, up more than $1 since the conflict started. Zandi said gasoline could fall toward $3.50 by year’s end under more optimistic scenarios, but that would still be well above the prewar level of $2.98.
Economists cited by CBS News expect inflation to remain elevated through 2026. The Consumer Price Index rose 3.3% on an annual basis last month, the highest since May 2024, driven by energy prices. Scott Lincicome of the Cato Institute said another inflation gauge, the Personal Consumption Expenditures price index, could reach 4% by the end of the year, twice the Federal Reserve’s 2% target.
The pressure is not limited to fuel. Higher diesel costs can raise the price of moving goods, while constraints on natural gas and fertilizer supplies could feed into food costs. Zandi told CBS News the effect can touch “anything that’s put on a truck,” from groceries to online deliveries.
The White House has argued the broader economy remains on firm footing. Spokesperson Kush Desai told CBS News that President Trump had been clear about “temporary disruptions” tied to Operation Epic Fury and pointed to private-sector job growth and easing core inflation in March.
Still, economists say the war is adding to other economic headwinds, including tariff uncertainty and labor-market shifts linked to artificial intelligence. EY-Parthenon chief economist Gregory Daco projected the conflict could subtract 0.3 percentage points from U.S. growth this year, with GDP expanding 1.8%, down from 2.1% in 2025.
For households, the next signals to watch are oil prices, gas prices and upcoming inflation readings. Even if the fighting stops soon, economists say the recovery in energy capacity and supply chains could take months, leaving consumers to absorb higher costs into 2026.
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