Rising gas prices and supply disruptions are increasing the cost to the economy

The disruptions from the US and Israeli attacks on Iran quickly spread to commercial aviation, shipping lanes and the world’s energy supply. These effects have already created fuel costs, including for truckers, truckers and fishermen, and are set to spread widely in packaging, household goods, appliances, medicine and electronics.

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I am learning about global supply chains and how they are interconnected and interdependent around the world. There are several ways that US consumers will begin to feel the pain of the war. Some of those effects are related to domestic trade, and others are due to the integration of global trade, where raw materials from one place are sent elsewhere to be made into certain products and then delivered to consumers.

Rising costs in the United States

There are three main groups where costs will start to rise.

Fuel shortages and freight charges: From March 2-16, 2026, the average nationwide price of US regular gasoline rose from US$3.01 to $3.96 per gallon, while diesel fuel rose from $3.89 to $5.37. Diesel prices are important to consumer spending because diesel engines power trucks, farm machinery, construction equipment, fishing boats and many household goods vehicles. When the commodity becomes more expensive to harvest, build and ship, the cost of diesel quickly increases to buy groceries, house prices and building materials.

Chemicals, fertilizers and packaging: QatarEnergy said that Iranian attacks on the world’s largest liquefied natural gas export facility in Ras Laffan and another plant in Mesaieed, both in Qatar, forced the company to stop producing LNG and related products on March 2. Two days later, the company announced that it would not fulfill its contracts due to excessive pressures that would require years to recover. The affected products included urea, polymers and methanol, which are used to make fertilizers, plastics, detergents, packaging and other consumer goods. Reduced production and closed transport routes are also affecting the supply of aluminum and helium produced in the Gulf countries.

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The decline of factories abroad: As supplies slow and energy costs rise, foreign firms face higher operating costs. They therefore guard food production, diverting energy supply to produce a narrow range of high-quality products that can absorb these costs. Disruptions to freight traffic and limited transport routes cause delays in arrivals. Economic research shows that rising export prices also raise import prices, producer costs and consumer price growth.

Delays in shipping and handling: At the beginning of the conflict, several countries, including Qatar, Bahrain, Kuwait and the United Arab Emirates, closed their airports to all traffic. The latest advisories warned of flight risks in neighboring countries, except for limited corridors. The shutdown has affected 20% of global air cargo capacity, raising the risk of delays for high-value goods such as medicine, aircraft parts and electronics.

The obstacles of the world

About 80% of the oil and 90% of the LNG that travels through the Strait of Hormuz, between the Persian Gulf and the Gulf of Oman, is destined for Asian markets. While shipments have been suspended, consumer electronics and manufacturing facilities in China, Japan, Taiwan and South Korea are using up their energy supplies and inventories. But that stock will run out in a few months. Reduced production capacity can be expected to cause shortages and higher costs for textiles, chemicals, consumer goods, electronics, appliances, auto parts and fertilizer-intensive industries.

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Europe is less directly dependent than Asia on supplies from Hormuz, but is still vulnerable to higher LNG prices, increased shipping costs and diesel fuel shortages. Europe is also facing shortages of heating oil and other fuels due to Russia’s war against Ukraine. The Strait is expected to account for 7% of Europe’s LNG supply by 2025, and high costs of energy, shipping fuel, freight and insurance could cripple global trade. For the US, that is important because Europe supplies industrial equipment, precision parts, medical technology and specialty chemicals that are sold to businesses and directly to consumers.

African economies are highly exposed to fuel and fertilizer concerns. Many types of fertilizers pass through Hormuz, and high energy and fertilizer prices threaten crop yields and food systems across Africa. As a result, US prices could rise for coffee and chocolate – much of which comes from Africa – as well as essential minerals for electric vehicles, energy storage and high-tech equipment.

Coming home to the Americans

This war is not a distant political distraction for US families. It reaches daily life through fuel, materials, fertilizers, petrochemicals and global supply chains through factories that produce consumer goods.

Another reduction is possible: 32 nations will be releasing more than 400 million barrels of oil on the world market in the next few months. There are pipelines and other ports in Saudi Arabia and the United Arab Emirates that, if they remain intact and uninterrupted, can handle 40% of the 20 billion barrels per day that used to pass through the Strait of Hormuz. Combined with the temporary reduction of sanctions on Russian oil, limited exports to India and China through the Strait of Hormuz and the March 23 announcement of a five-day pause on US and Israeli attacks on Iran, it is possible to end the worst-case scenario.

But these measures will not replace conventional strait oil and the value of LNG cargo. And if oil production, refining and shipping continue to be expected, the recovery can be expected to continue for many months. The likely result is a sharp rise in prices, long-term shortages and long waits for all kinds of goods, including food and packaging as well as electronics and appliances.

This article is reprinted from The Conversation under a Creative Commons license. Read the first article.