How is the Iran War affecting gas prices in the United States?

Gas prices have risen sharply since the conflict began on February 28, 2026. According to AAA, the national average jumped to $3.84 per gallon as of March 18, 2026, up from $2.98 before the war. Analysts at GasBuddy warn that every week the conflict continues, prices could rise another 25 to 40 cents per gallon.

Will the Iran War cause a recession in the United States?

A U.S. recession is not inevitable, but the risk increases the longer the conflict lasts. Economists predict the U.S. will grow 2.25% in 2026 and is better insulated than most economies due to domestic oil production. However, a prolonged conflict could trigger stagflation — high inflation combined with weak economic growth — which would be difficult for policymakers to manage.

Should I sell my investments because of the Iran War?

Most financial advisors recommend against making dramatic portfolio changes in response to geopolitical events. Historical data shows that missing just the stock market's 10 best days over a 30-year period would cut returns in half, and 78% of the market's best days have occurred during bear markets. Long-term investors are generally best served by staying the course and reviewing their plan with a financial advisor.

How could the Iran War affect grocery prices?

Grocery prices are expected to rise due to higher fuel costs for transportation and a potential fertilizer shortage. Gulf states produce nearly 49% of global urea exports, a key agricultural fertilizer. The American Farm Bureau has warned of a possible U.S. crop shortfall if fertilizer supply is disrupted during the spring planting season, which could elevate food prices into 2027.

What should I do with my retirement savings during the Iran War?

For most people, no major changes are necessary. However, those nearing retirement should review their portfolio for concentration risk and ensure they have at least five years' worth of spending needs in cash or short-term bonds, so they are not forced to sell equities at a loss during a downturn. A qualified financial advisor can help you assess whether any adjustments are appropriate for your specific situation.

How high could oil prices go because of the Iran War?

Oil prices have already risen from around $70 per barrel before the conflict to over $110 per barrel. In a short conflict scenario, prices could fall back to around $65 per barrel by year-end. In a prolonged conflict, Capital Economics projects prices could reach $130–$150 per barrel in Q2 2026, with some analysts warning that $200 per barrel is not outside the realm of possibility.

What is the Strait of Hormuz and why does it matter for my finances?

The Strait of Hormuz is a narrow waterway between Iran and Oman through which approximately 20% of the world's oil supply and one-fifth of global liquefied natural gas (LNG) shipments transit. Iran has effectively halted commercial tanker traffic through the strait since the conflict began, causing global oil and gas prices to surge and contributing to rising costs for gasoline, electricity, groceries, and consumer goods in the United States.

How the Iran War Could Impact Your Personal Finances

HFF Staff Writer
3 hours ago
9 min read

On February 28, 2026, U.S. and Israeli forces launched joint airstrikes on Iran, triggering a conflict that has sent shockwaves through global energy markets, rattled investors, and already begun to change what everyday Americans pay at the pump and the grocery store. Here's what you need to know — and what steps you can take right now.

Six fighter jets with distinct markings fly in formation against a cloudy sky, creating a dynamic and powerful scene.

~20%

of global oil supply transits the Strait of Hormuz — now effectively closed

$110+

Brent crude per barrel since the conflict began, up from ~$70

$3.84

National average gas price as of March 18, up from $2.98 pre-war

3%+

Projected U.S. inflation rate in coming months, per JPMorgan economists

The Big Picture: What Happened and Why It Matters

The 2026 conflict with Iran — codenamed "Operation Epic Fury" by U.S. forces — began with strikes targeting Iranian leadership and military infrastructure. Iran's retaliation has included ballistic missile strikes on Gulf states hosting U.S. forces and, critically, a near-total halt of commercial tanker traffic through the Strait of Hormuz.

Chatham House notes that roughly a quarter of global seaborne oil passes through the Strait of Hormuz, along with roughly one-fifth of liquefied natural gas (LNG) shipments, and any disruption to transit through this narrow chokepoint has immediate consequences for global energy markets.

The World Economic Forum describes the underlying logic of Iran's strategy bluntly: Iran, unable to match the U.S. and Israel militarily, is internationalizing the costs of war by targeting energy, shipping, commercial and civilian infrastructure across the Gulf, with the aim of raising the price of escalation until pressure for de-escalation builds.

The economic impact is being compared to the worst oil shocks in living memory. Economists have described the economic impact of the 2026 Iran war as the worst since at least the 1970s, echoing the supply shortages, high oil prices, and projections of global inflation and risks of recession and stagflation if disruptions persisted.

What You're Already Paying More For

Gas Prices

The most immediate hit to household budgets has been at the fuel pump. According to motor club AAA, the national average for a gallon of regular gasoline jumped to $3.84 as of March 18, up from $2.98 before the U.S. and Israel launched the war. And relief may not come quickly: Patrick DeHaan, who leads petroleum analysis for GasBuddy, warned that every week the conflict continues, prices could see another 25 to 40 cent increase.

Higher diesel prices have an inflationary impact on nearly all goods in the economy, because diesel is used to power farm equipment, construction equipment, and the trucks, ships, and many of the trains that carry goods around the world.

Groceries and Food Prices

Your grocery bill is next in line. Grocery stores are among the first places consumers will see the effects of higher fuel prices — specifically the produce, meat, and dairy aisles — because the less shelf-stable an item is, the less companies can stockpile it and the more vulnerable it is to price increases.

There's an additional, less-obvious threat: fertilizer. The Persian Gulf is a major source of global fertilizer supply because natural gas is an essential feedstock for several fertilizers, including urea, the most widely used nitrogen fertilizer. Gulf states produce nearly 49% of global urea exports and 30% of global ammonia exports, according to American Farm Bureau economists. American Farm Bureau president Zippy Duvall warned in a letter to President Trump that the U.S. "risks a shortfall in crops" that could contribute to inflationary pressures across the entire economy.

Utility Bills and Broader Inflation

The war in Iran will cost Americans more at the pump as well as on their utility and grocery bills. Economists at JPMorgan estimate that U.S. oil prices increasing by roughly 42% from pre-war levels could push inflation from 2.4% in January to 3% or higher in the coming months. Gregory Daco, chief economist at EY-Parthenon, estimated the bump in gas prices could push monthly inflation to as high as 1% in March — the highest monthly increase in four years.

KEY TAKEAWAY

"The war is putting upward pressure on prices for gasoline, electricity, and groceries through higher transportation, packaging and fertilizer costs. This will worsen affordability for families already struggling with the high cost of living." — Wayne Winegarden, economist, Pacific Research Institute

Your Investment Portfolio: How to Think About Market Volatility

Since February 28, stock markets have experienced notable turbulence. Global stock markets declined, with the Dow Jones falling over 400 points and the S&P 500 dropping 0.7% on March 2. European and Asian indexes fell 1–2%, reflecting fears of inflation and supply chain issues. Gold prices rose as a safe-haven asset, while airline stocks like United Airlines dropped 6%.

However, history offers important perspective. According to a Stock Trader's Almanac analysis of 17 incidents since 1939, the average one-week drop of the S&P 500 after an initial geopolitical shock is just 1.09%. Markets have recovered from every major conflict, though timelines vary.

Charles Schwab's investment strategists note that even if military activity ends soon, the impacts to growth, inflation, and commodity prices could linger, and the longer energy and commodity supplies remain disrupted, the greater the potential economic damage — with Asia appearing most vulnerable and Europe also facing meaningful exposure.

The Danger of Panic Selling

The advice from financial planners is consistent: don't make dramatic portfolio changes in response to headlines. Research shows that if you missed the stock market's 10 best days over a 30-year period through 2024, your returns would have been cut in half, according to Hartford Funds. Missing the best 30 days would have reduced returns by 83%. Additionally, 78% of the stock market's best days occurred during a bear market.

Certified financial planner Lee Baker put it plainly: "If you have an investment strategy, stick to it. Don't change it because you think, 'Oh no, we're going to war, this is the end, I'm going to lose all my money' — that type of thinking."

Special Consideration: Near-Retirees

Those within a few years of retirement may face a different calculus. Christine Benz, director of personal finance and retirement planning at Morningstar and author of "How to Retire," says: "If you're on the precipice of retirement, it is smart to take a look at that portfolio and think about taking some risk out of it."

But even then, balance is critical. Most older investors still need a portion of their portfolio in the market, because people approaching retirement could still have decades of living ahead of them, and being overly cautious of market volatility could leave investors with a portfolio unable to grow enough to meet their spending needs through retirement.

Two Scenarios and What They Mean for You

Economists are tracking two broad paths the conflict could take, with meaningfully different outcomes for your finances:

Factor	Short Conflict (weeks)	Prolonged Conflict (months)
Oil Price Trajectory	Falls back sharply; Brent possibly $65/barrel by year-end	Could rise to $130–$150/barrel in Q2; worst-case $200+ possible
U.S. Gas Prices	Relief within weeks of ceasefire	Continued 25–40¢/week increases; $5+ per gallon possible
Inflation	~0.5 percentage point above forecast; manageable	3–4%+ in U.S.; stagflation risk rises sharply
Stock Markets	Likely rebound on ceasefire news OPPORTUNITY	Sustained pressure; international markets most at risk CAUTION
Interest Rates	Fed strategy largely unchanged	Fed may need to hike to combat inflation, complicating recovery WATCH
Grocery & Food Costs	Near-term spikes in fresh produce; stabilizes	Fertilizer shortfall threatens harvest later in 2026; elevated into 2027

Sources: Chatham House; Capital Economics via Al Jazeera

Where Opportunities May Exist

Not every sector suffers in a wartime energy shock. Oxford Economics/Alpine Macro analysts noted that oil, gas, out-of-region energy stocks, gold, and aerospace and defense will likely spike, and that extreme moves should eventually fade as the conflict is not expected to last beyond two months.

Morgan Stanley's wealth management team advises that in 2026, investors should consider increasing exposure around themes like defense, security, aerospace, and industrial resilience, where government spending can drive multiyear demand.

Meanwhile, U.S. energy producers stand to benefit from elevated prices. The U.S. is the world's top oil producer at 22% of global output in 2023, which dramatically limits the impact of supply problems in other parts of the world, and rising oil prices will spur U.S. producers to increase their output.

IMPORTANT REMINDER

Tactical portfolio shifts carry real risks. Any changes to your investment allocation should be discussed with a qualified financial advisor and made within the context of your full financial plan — not in reaction to short-term headlines.

7 Steps to Protect Your Finances Right Now

Whether the conflict is brief or drawn-out, the following steps are prudent in any high-uncertainty environment:

Shore up your emergency fund. Financial advisors generally recommend keeping six to 12 months' worth of expenses in an emergency fund, and 2% to 10% of a portfolio in cash, depending on your individual circumstances, life stage, and goals.
Match your cash to your timeline. If it's money you'll need in the next 30 days, it should be in a checking account; the next six months, a high-yield savings account. For a time frame of six months to two years, consider U.S. Treasury bills or short-term Treasury exchange-traded funds that mature in zero to three months.
Don't abandon your long-term plan. The lesson from decades of market history is clear: volatility is expected, but abandoning a long-term strategy can be costly. Instead of reacting to daily headlines, it's best to stick to a financial plan based on personal goals, risk tolerance, and time horizon.
Review your portfolio diversification. "Ensure your portfolio is diversified, understand what you own and why, and make sure a portion of your retirement income is guaranteed, so market volatility does not force financial decisions," according to TIAA Wealth Management CEO David Nason. "The clients that are best positioned to weather this uncertainty are those who planned for it before it happened."
Audit concentration risk. Many older workers have held on to their company's stock for a long time, and there may be significant concentration risks to address — positions that investors often don't want to touch because of taxes on gains or emotional attachment. Now is the time for an honest review.
Adjust your household budget for higher fuel and food costs. U.S. households pay on average about $2,500 a year — nearly $50 a week — to fill up their tank. If consumers are paying $10 more per week, their budgets are affected, and discretionary spending on dining out and entertainment may need to be trimmed.
Near retirees: stress-test your drawdown plan. The goal for investors nearing the end of their careers is to ensure they have enough in safe assets to get through a downturn without needing to sell their stocks at a discount. Benz recommends having at least five years' worth of portfolio spending in cash or short-term bonds.

The Word Nobody Wants to Say: Stagflation

The scenario most feared by economists is stagflation — a combination of high inflation and weak economic growth that is exceptionally difficult to resolve with conventional monetary policy tools. Oil price shocks have historically summoned stagflation, and economists point to the crises of 1973, 1978, and 2008 as evidence that every significant spike in oil prices has been followed in some form by a global recession.

Senior economist Frederic Schneider of the Middle East Council on Global Affairs warns that the worst-case scenario would be an economic slump combined with an interest rate hike to curb inflation — a combination that could trigger the bursting of asset bubbles and potentially lead to another debt crisis similar to the one seen in 2008.

For now, the U.S. is better insulated than most. Economists predicted the U.S. would outperform other economies by growing by 2.25% in 2026, with inflation peaking at around 3% year on year. But this advantage erodes the longer the conflict persists.

Not Sure How This Affects Your Plan?

Every client's financial situation is different. The steps above are general guidelines — but the right moves for your portfolio, your retirement timeline, and your household budget depend on your specific circumstances. Our advisors are available to review your plan and help you make confident decisions amid uncertainty.

SCHEDULE A REVIEW →

Works Cited

Chatham House. "How will the Iran war affect the global economy?" March 2026. chathamhouse.org
World Economic Forum. "The global price tag of war in the Middle East." March 2026. weforum.org
Wikipedia / multiple sourced analysts. "Economic impact of the 2026 Iran war." Accessed March 18, 2026. wikipedia.org
Al Jazeera. "How badly has the Iran war hit the global economy? The tell-tale signs." March 16, 2026. aljazeera.com
Al Jazeera. "How will the war on Iran impact the US economy?" March 12, 2026. aljazeera.com
Oxford Economics / Alpine Macro. "The 2026 Iran War, An Initial Take and Implications." March 2026. oxfordeconomics.com
Euronews. "The Iran war could trigger deeper economic fallout than markets expect." March 16, 2026. euronews.com
CNN Business. "Gas is just the start: What else the Iran war could soon cost you." March 12, 2026. cnn.com
Time. "How Much is the War in Iran Costing You?" March 13, 2026. time.com
Center for American Progress. "The War in Iran Will Raise Fuel Prices and Costs Throughout the Economy." March 2026. americanprogress.org
Fortune. "Your grocery bill, gas tank, and heating bill are all about to get more expensive." March 10, 2026. fortune.com
Fortune. "U.S. gas prices reach highest level since 2023 with no end for the Iran War in sight." March 18, 2026. fortune.com
NPR. "Gasoline prices are still rising as the Iran war stretches into its third week." March 16, 2026. npr.org
CNBC. "Iran war and your portfolio: The historical stock market patterns investors should know." March 4, 2026. cnbc.com
CNBC. "Where investors can look for stability as the Iran war rattles markets." March 5, 2026. cnbc.com
CNBC. "What the Iran war market turmoil means for those nearing retirement." March 5, 2026. cnbc.com
Charles Schwab. "Iran War: Potential Impact on Global Equities." March 13, 2026. schwab.com
Morgan Stanley. "Iran Conflict: Oil Price Impacts and Inflation." 2026. morganstanley.com
The Motley Fool. "What Might the Iran War Mean for the Stock Market?" March 13, 2026. fool.com
Moneywise. "Dave Ramsey's blunt advice for Iran war market jitters." March 2026. moneywise.com
NBC News. "Inflation was steady in February before the Iran war drove up gas prices." March 2026. nbcnews.com
Fortune. "'Peak war panic' will likely hit financial markets in 1–3 weeks, strategist predicts." March 14, 2026. fortune.com

This article is provided for informational and educational purposes only and does not constitute investment, legal, or tax advice. Past market performance is not indicative of future results. Please consult with a qualified financial professional before making any changes to your investment portfolio or financial plan. Halter Ferguson Financial is a registered investment advisory firm. Visit hffinancial.com for more information.

Subscribe to get exclusive updates