The Iran war's economic blowback is getting real
https://www.axios.com/2026/03/09/iran-war-oil-economy-blowback-prices-us
In the first week of the American and Israeli attack on Iran, the economic ripples were looking pretty minimal. But as Week 2 begins, the risks to the global economy are growing much more serious.
The big picture: You can't decapitate the leadership of a country of 90 million people, with expansive military and intelligence capabilities, in the heart of some of the world's most economically important supply chains, without a huge cost.
- The hours and days and weeks ahead are all about quantifying that cost.
Zoom in: Oil skyrocketed 25% overnight, to just under $120 a barrel, fueling worries that higher energy costs will stoke inflation and curb spending by U.S. consumers. Tokyo's Nikkei 225 index plunged more than 5%.
- That's the highest oil price since about four years ago, when energy prices surged due to Russia's invasion of Ukraine.
- Patrick De Haan — a widely cited gas price expert and an analyst for GasBuddy — estimates there's an 80% chance the national average gas price will hit $4 per gallon in the next month.
The latest: As of 5am ET, a barrel of the global crude oil benchmark was going for about $107 on futures markets, up 15% from Friday and 47% from 10 days ago, before the Iran attack. Brent crude prices approached $120 overnight before receding on reports of coordinated global action to release oil reserves.
- The oil price rise is poised to translate into a rapid increase in the cost of retail gasoline, which was already up about 51 cents per gallon before the weekend run-up in oil prices.
The risk of a broader economic slump is rising with the disruption to oil supplies. S&P 500 futures are down 1.3% overnight, setting Wall Street up for its third consecutive day of losses.
- Japan's Nikkei index was down 5.2% and South Korea's KOSPI down 6%, reflecting those economies' more direct dependence on Middle Eastern oil now at risk of a protracted blockade.
Of note: The odds of a U.S. recession this year spiked to 38% in overnight trading on Polymarket, from 24% at the start of the month.
State of play: Iran is seeking to block the Strait of Hormuz, which connects the Persian Gulf with the rest of the world, and is threatening to attack ships that seek to pass through.
- The war has already caused the largest oil disruption in history, taking out roughly 20% of the world's supply, according to Bob McNally, president of Rapidan Energy and a former George W. Bush energy adviser.
- That's double the previous record set during the Suez Crisis in the 1950s, which disrupted just under 10% of global supply.
- The weekend also brought apparently successful Iranian attacks on desalination plants in the Gulf region that are critical for drinking water.
- President Trump has raised the possibility of U.S. ground forces in Iran.
What they're saying: Trump wrote on Truth Social Sunday night: "Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace."
- "ONLY FOOLS WOULD THINK DIFFERENTLY!" he added.
Reality check: The U.S. economy has proven exceptionally resilient to global shocks — including throughout the Ukraine war, which initially caused an unpleasant spike in prices but not a recession.
- The United States is a net exporter of oil, which means that from the macroeconomic standpoint, higher prices at the pump are likely to be offset by higher income for energy extraction industries.
Yes, but: Solid GDP growth is no consolation for higher day-to-day prices for American consumers, which doomed Joe Biden's popularity. If the recent energy price surge is sustained, that will be Trump's burden as well.
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