The Iran war is beginning to weigh on the broader American economy through its sustained impact on US oil prices, with the conflict entering its third week and showing no signs of ending. Analyst Patrick De Haan projects Monday pump prices of $3.80 to $3.85 per gallon, with $4 gasoline remaining possible. The economic weight of sustained high energy prices is beginning to be felt across multiple sectors of the American economy.
Before the conflict began on February 28, the national gasoline average was below $3 per gallon. Three weeks of the Iran war have driven it 23% higher to $3.70, creating a drag on consumer spending, business operating costs, and the logistics of goods distribution across the country. The broader economic impact of elevated energy costs is growing more visible with each week of continued conflict.
The US strike on Kharg Island last Friday, targeting Iran’s most important oil processing hub, deepened the global supply shortage that is now weighing on economic activity worldwide. Iran’s continuation of the Strait of Hormuz blockade has denied global markets access to roughly one-fifth of their usual daily oil supply. Brent crude ranged from $103 to $106 per barrel Monday, while US crude held near $94 after briefly spiking to $100 the previous day.
California’s economic pain has been most acute, with average pump prices above $5 per gallon and some Los Angeles stations posting above $8. Diesel for commercial transport could reach $5.15 per gallon nationally, inflating the cost of delivering consumer goods across the country. The CEOs of Exxon, Conoco, and Chevron have all warned White House officials about the deepening supply crisis, with Exxon’s Darren Woods specifically highlighting the economic danger of speculative market activity compounding the impact of physical supply shortages.
Wall Street started the week with mild gains, the S&P 500 rising about 1% as crude prices briefly retreated. Oil company shares have surged to record highs since the conflict began. The economic weight of the oil price crisis will continue to grow as long as the Iran war persists and the global energy supply disruption remains unresolved.