3 ways the attacks on Iran could impact a U.S. economy already hit by tariffs and a weak job market

Americans could see higher prices at the pump as early as this week.

The U.S. and Israeli attacks on Iran add yet more question marks around a U.S. economy already buffeted by on-and-off tariffs, weak hiring, and lingering inflationary pressures.

The war has already raised oil prices and could lift prices at the pump as early as this week, but the ultimate impact on the economy and inflation will depend on the length and severity of the conflict, economists say. Should it wind down in a week or two, its economic effects would be minor and short-lived.

Yet a longer war that pushed oil past $100 a barrel for an extended period would worsen inflation, at least temporarily, while slowing growth and intensifying Americans’ unhappiness with the cost of essentials. After nearly five years of rising prices, concerns around affordability have undercut President Donald Trump’s support in polls and bolstered Democrats in recent elections.

For now, the price of a barrel of benchmark U.S. crude rose 6.3% Monday to settle at $71.23. Brent crude, the international standard, climbed 6.7% to $77.74 per barrel. An increase at that level, even if sustained, would barely lift inflation, economists said.

“While cost-conscious Americans who are dealing with an affordability crisis will not take this increase lightly, such an increase will not materially affect economic growth,” Joe Brusuelas, an economist at RSM, a consulting firm, said.

Stock prices rebounded to show a small gain Monday after initially falling sharply, a sign of optimism that the war will be short-lived.

But a longer-lasting conflict, particularly one that closed down the Strait of Hormuz at the edge of the Persian Gulf, through which roughly 25% of the world’s oil passes, could push oil past that $100 a barrel mark. Gas prices in the U.S. could then reach $3.50 a gallon, up from just under $3 on average nationwide on Monday.

Such price jumps would accelerate inflation in the U.S. and slow growth, economists said.

“Markets are right now really under-pricing the tail risk of a sustained engagement and an operation that does not wrap up quickly, restore travel through the Strait of Hormuz and get everything back to de-escalation and normal in a timely manner,” said Alex Jacquez, chief of policy and advocacy at the Groundwork Collaborative and an economic adviser to the Biden White House.

Here are some ways the war could affect the economy.