Iran War Drives Up Gas Prices, Puts Pressure on U.S. Households

The Iran war has moved from geopolitics into the weekly budget, pushing the national average gasoline price above $4 a gallon for the first time in more than three years and lifting retail diesel prices to more than $5.60 a gallon. For commuters, delivery drivers, caterers and small businesses, the squeeze has been immediate: every extra mile now costs more, and every fuel purchase eats further into already tight margins.

The conflict began on February 28 and has already unsettled the broader economy through energy markets. The Federal Reserve said many firms were taking a wait-and-see posture as uncertainty around the war complicated hiring, pricing and capital investment decisions. The Fed also said shipments through the Strait of Hormuz were disrupted, a chokepoint for about a fifth of the world’s oil shipments and about a third of global fertilizer shipments, underscoring how quickly a regional conflict can ripple through fuel, food and transport costs.

Economists say the damage could stay manageable if a fragile ceasefire holds, but the risk rises sharply if fighting resumes. Joseph Brusuelas of RSM said $125 a barrel for West Texas Intermediate crude would be the point where the war “becomes more of an economic problem.” Even if the shooting stops, analysts say consumers should not expect relief right away. Oil, gasoline, diesel and other commodity supplies would not quickly return to prewar levels, leaving prices elevated for weeks or months.

The White House is also being pressed on the war’s fiscal cost. On April 15, Russell Vought told Congress he could not estimate the bill, saying, “I don’t have a ballpark.” He was defending President Donald Trump’s proposed $1.5 trillion annual military budget and a $200 billion war-funding request that has already met stiff resistance on Capitol Hill. The budget fight comes as Trump’s 2027 plan calls for a $500 billion increase in military spending and a 10% reduction in non-defense programs.

Public unease is rising alongside the price pressure. Reuters/Ipsos found on March 31 that 60% of Americans opposed U.S. military strikes on Iran, while 74% of Republicans supported them compared with 7% of Democrats. The IMF cut its growth outlook on April 14 because of war-driven energy spikes and shipping disruptions, warning that the outlook could worsen further if Strait of Hormuz disruptions continue. Even with stocks holding up and the Fed expected to keep its benchmark rate in the 3.50% to 3.75% range later this month, the war is already testing the gap between calm markets and the reality at the pump.