Why war with Iran could raise prices on goods in the U.S.

It’s unclear how long the U.S. and Israel-Iran war is going to last or how far it’s going to go. President Trump has suggested there are four to five weeks of combat ahead — but that he’s prepared to go longer.

With a lot of unknowns, it’s hard to know exactly how this conflict is going to play out in the economy here in the U.S. But experts say war with Iran could raise prices on goods including gas and groceries.

One thing that is tangible: The average price for a gallon of regular gas is just shy of $3 right now, according to AAA. Tom Kloza, chief analyst at Gulf Oil, said that will go up a bit.

“It looks like we’re gonna go in relatively short order to about $3.10 to $3.25,” he said.

Some of this is seasonal and expected. But if the conflict with Iran continues deeper into March and April, Kloza said prices might peak as high as $3.50 a gallon.

“It very much is the rocket and feather. Prices go up like a rocket. If this is all over with in a few months they’ll come down like a feather,” he said.

So, a few months of temporary pain to the wallet.

Mark Zandi, chief economist at Moody’s Analytics, said that’s enough to make consumers — who are already price-sensitive after years of inflation — even more nervous.

“The only thing where prices really have not risen significantly and really aren’t bothering people is the cost of buying a gallon of regular unleaded,” he said.

Seventy percent of consumers say gas prices affect their feelings about the economy, according to the National Association of Convenience stores.

“I think I’d be worried about what kind of impact this might have on the collective psyche,” Zandi said.

After all, consumers drive the economy.

The war may also weigh on the corporate psyche. Adam Posen, president of the Peterson Institute for International Economics, said a prolonged conflict could mean higher shipping costs, delayed cargo, and elevated insurance premiums. 

“I think the business side of it, in terms of passing on [costs to the consumers] would probably take a little longer, more like two, three, four months,” Posen said.

He said companies had already been planning to raise prices this year because of tariffs, after holding off for most of 2025.

“This gives them further cover to do it,” Posen said, which could lead to a temporary spike in inflation.

The thing is, we don’t yet know the length or scope of this war, so we can’t predict how mild or major the economic effects will be. But it does add another layer of uncertainty onto an already uncertain economy.