Although the Trump administration announced Tuesday it had reached a provisional two-week ceasefire with Iran, global supply chains will still be reeling for months from the conflict and its upheaval to oil and gas production. Some consequences of the war—such as a higher baseline level of risk in the Persian Gulf region—will likely persist even if traffic again flows through the Strait of Hormuz and oil production comes back online, resulting in higher costs for shipping, fuel, and other commodities.
The Trump administration’s war of choice caused unnecessary loss of life, displaced civilians, and has seen both sides damage critical infrastructure across the region. The war accomplished none of the Trump administration’s objectives, unclear as they were. Iran is now led by a more defiant, hardline leader; it retains enriched uranium stockpiles; it is in a position to rebuild its weapons arsenal; and now it has effectively established control over the critical Strait of Hormuz. The war has also been economically costly. As of late March, it had cost the U.S. government an estimated $25 billion, with costs beyond that estimated at around $500 million per day.
The war has already taken an economic toll on U.S. consumers, businesses, and farmers
The war sharply drove up prices for oil, which as of April 8, 2026, still remain well above pre-war levels. (see Table 1) Those higher fuel prices are expected to show up in the March inflation numbers that the U.S. Bureau of Economic Analysis will release on Friday. Wall Street analysts are expecting the March consumer price index to come in nearly a full percentage point higher than February’s rate, which would result in a year-over-year increase of 3.3 percent.
The most obvious sign of the war’s increasing costs for Americans has been at the gas pump. Gasoline prices have spiked, exceeding $4 per gallon nationally by the end of March and hitting a four-year high. In March, American households paid $8.4 billion more for gasoline compared with pre-war prices. The burden of higher fuel costs is not distributed evenly. In 2024, Americans in the lowest income quintile spent 30.6 percent of their pre-tax income on transportation, compared with 9.6 percent of pre-tax income for the highest income quintile. This means that households with the fewest means have been, and will continue to be, the most adversely affected by high gas prices. High gas prices also disproportionately affect members of rural households, who drive significantly more.
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High fuel prices, as well as increased costs of other vital manufacturing inputs such as liquified natural gas (LNG) and aluminum, also hit U.S. businesses, making it more expensive to supply American factories and transport goods. Supply chain shortages and delays created by the closure of the Strait of Hormuz have also created challenges for American manufacturers trying to import goods from other markets, as 60 to 70 percent of the world’s largest ports were deemed to be severely congested. Airlines have responded to higher prices for jet fuel by raising fares, cutting flights, and upping baggage fees. Meanwhile, mortgage rates have risen each week the conflict has lasted after falling below 6 percent at the end of February for the first time since 2022, costing homebuyers tens of thousands of dollars over the lifetime of a 30-year loan.
As the war coincided with the arrival of their spring planting season, U.S. farmers faced supply shocks and rising prices for fertilizer and diesel. Around one-third and one-quarter of the global seaborne fertilizer and oil trades, respectively, pass through the Strait of Hormuz. Prices for these input costs had risen to about 50 percent above pre-war levels before the ceasefire announcement, adding financial pressure on farmers who were seeing growth in input costs outpace their revenues for years before the war began. With farm debt and bankruptcies on the rise in recent years, the added costs incurred as a result of the war in Iran put many struggling farmers at risk of financial ruin.
Supply chain disruptions will persist for months
It will take time for supply chains to recover from the damage that the closure of the Strait of Hormuz caused. At least 10 percent of the world’s oil supply is offline due to strikes that hit refineries, storage facilities, and oil fields in at least nine countries. Readying those facilities to resume production will take months; the head of the International Energy Agency said it could take six months or longer for sites around the Persian Gulf to become fully operational again. For example, Qatar lost 17 percent of its LNG production capacity. Ras Laffan, its main site for LNG production, was taken out by Iran and could take three to five years to rebuild.
It will also take weeks for empty oil tankers to return to the Gulf and then transport that oil to destinations around the world. Container shipping company Hapag-Lloyd said it expected shipping traffic will not be back to normal for at least six to eight weeks. Recent reporting that Iran is implementing tolls for passage through the strait could slow down movement in the passageway as well.
Costs will be elevated in the new normal
Fuel prices are likely to remain higher than pre-war levels in the near future. Though oil prices declined on the news of the ceasefire, they are expected to remain elevated relative to before the conflict. While analysts have said they expect Brent crude oil to settle at $80 by the end of 2026, that price would still be 10 percent higher than it was before the war. Even if oil prices come down, relief will be slow for consumers at the gas pump. Gas prices typically track oil prices like “rockets and feathers”: Retail prices for gas rise quickly on spikes in oil prices, but they are slow to fall after oil prices decline.
Without certainty over whether a ceasefire will hold, risk in the Gulf region remains elevated. Costs for marine insurance rose in response to the war, raising costs for shipping, and the threat of renewed conflict is likely to keep prices above pre-war levels. It also remains to be seen whether the war will result in a lasting pullout of U.S. business investment in the region, which had been a target for growth.
Conclusion
While it is unclear whether the two-week ceasefire will lead to a lasting resolution to the war, much of the economic damage has already been done, with consumers and businesses far removed from the conflict forced to suffer the expensive consequences for months to come.
The authors would like to thank Mimla Wardak, Amina Khalique, Anh Nguyen, and Cindy Murphy-Tofig for their valuable input and review.