Six months of Iran conflict impacts U.S. prices and consumer sentiment
The ongoing war between the United States, Israel and Iran has raised food, fuel and travel costs in the United States and lowered consumer confidence.
Six months after President Donald Trump announced U.S. and Israeli strikes on Iran, the conflict has shifted to a prolonged standoff over the Strait of Hormuz, a key oil-shipping corridor that handles about one-fifth of global oil trade. New U.S. sanctions were imposed on Iran and its allies in late August, while officials said additional military action remains possible.
Disruptions to oil shipments through the strait have pushed crude prices higher, leading to increased gasoline prices and higher jet fuel costs. As a result, U.S. consumers are facing higher expenses for meals at home and in restaurants, and airlines have added fuel surcharges and reduced flight options.
The war has also affected agricultural inputs. About one-third of global seaborne fertilizer trade passes through the Strait of Hormuz; interruptions have limited supplies of urea and ammonia, raising fertilizer prices and adding costs for farmers.
Economic confidence appears to be waning. The consumer sentiment index fell 7.6% in August after two months of gains, a decline attributed in part to sustained gasoline prices above $4 per gallon and concerns about inflation eroding purchasing power.
"The conflict has raised domestic concerns about the economy, especially because of disruptions in oil shipments and rising energy costs," a White House spokesperson said.
The Houthi movement in Yemen, which controls the Bab el-Mandeb Strait, announced a Red Sea blockade in late July, further threatening oil flow through another critical route. Global oil prices briefly reached $100 a barrel after Houthi attacks on two Saudi-flagged tankers.