Iran Conflict Has Cost US Consumers $21.3 Billion in Higher Gas Prices, Economist Estimates

The ongoing conflict with Iran has cost American consumers an additional $21.3 billion at the gas pump in just over six weeks, according to a new analysis by Mark Zandi, chief economist at Moody's. The sharp increase in fuel costs is squeezing household budgets and raising concerns about broader inflationary pressures on the U.S. economy. The estimate quantifies the financial impact on drivers since the U.S. and Israel launched airstrikes against Iran in late February 2026. The conflict immediately roiled global energy markets, pushing the price of West Texas Intermediate (WTI) crude oil from around $60 per barrel prior to the strikes to over $100 per barrel by the end of March. In remarks made during a conference in early April, Zandi explained the direct link between crude oil prices and what consumers pay. "Here’s a good rule of thumb: for every $10 increase in the cost of a barrel of oil, it raises the cost of the gallon of regular unleaded gas by 25 cents," he said. "So, if you go from $60 to $100, that’s a buck [increase] in gas. And that’s exactly what’s happened — from just under $3 a gallon to just about $4 a gallon." According to AAA data, the national average gasoline price has climbed steadily, approaching the $4 per gallon mark Zandi predicted. This rapid rise in a non-discretionary expense is hitting low- and middle-income households the hardest. "For a lot of low- to middle-income Americans, that’s a big deal because they live paycheck to paycheck," Zandi noted. "And if they have to put more of their hard-earned cash into their gas tank, that means they have less to spend on everything else." This reduction in consumer purchasing power poses a significant threat to small and mid-sized businesses that rely on discretionary spending. The added fuel expense comes at a particularly vulnerable time for the U.S. economy, which showed signs of softening even before the conflict began. The Bureau of Labor Statistics reported a loss of jobs in February, with the unemployment rate ticking up to 4.4%. The surge in energy costs is also fueling wider fears of sustained inflation. "If oil prices stay near current levels of $100 per barrel... inflation will quickly accelerate, cutting into consumers' purchasing power, and hitting consumer spending, GDP and jobs," Zandi told CNBC. These inflationary pressures have contributed to an uptick in the yield on the 10-year Treasury note, a benchmark that influences interest rates for mortgages and other business and consumer loans, further tightening financial conditions. Zandi's $21.3 billion figure is one of several attempts to calculate the war's economic toll. An alternative estimate released by the Democratic minority of Congress's Joint Economic Committee on April 2 placed the additional cost to American drivers at $8.4 billion. That calculation was based on AAA gas price data from February 28 through March 31, combined with federal data on fuel consumption and vehicle tank sizes. While the figures differ, they both point to a multi-billion-dollar drain on the U.S. economy. Economists warn that a swift return to lower prices is unlikely, even if the conflict de-escalates. Zandi argued that the $60 per barrel price for WTI crude, long considered a point of equilibrium, is not on the near-term horizon. He predicts that a significant "risk premium" will remain attached to oil prices for the foreseeable future. This premium reflects the increased costs and perceived risks of shipping oil through the Strait of Hormuz, a critical global chokepoint. According to Zandi, both the insurance industry and oil traders will demand higher premiums to guard against the possibility of future disruptions in the region. For business owners, these external shocks create immense operational and financial uncertainty. The direct impact of higher fuel and transportation costs is clear, but the secondary effects of diminished consumer demand and rising inflation can be even more damaging. In our experience, companies that wait for volatility to pass often find themselves in a reactive, defensive posture. The current environment demands a more forward-looking approach, where potential disruptions are anticipated and planned for. Our view is that building resilience is no longer optional. Businesses must move beyond simple budgeting and engage in rigorous scenario planning to understand how sustained high energy prices, supply chain disruptions, or a broader economic downturn could affect their cash flow, profitability, and solvency. This is precisely the kind of challenge where robust financial risk management becomes a competitive advantage, not just a defensive measure. We help clients build these frameworks to stress-test their operations and develop contingency plans that protect their bottom line. To understand how to insulate your business from geopolitical and economic shocks, contact C&S Finance Group LLC at csfinancegroup.com. Moving forward, business leaders and policymakers will be closely watching key economic indicators for signs of sustained damage. The duration of the conflict in the Middle East remains the largest variable, but its long-term effects on global energy markets, inflation, and central bank policy will likely shape the economic landscape for months to come.