Half a year after the U.S. and Israel began military action against Iran, global markets have stabilized, but higher fuel and travel costs are affecting everyday Americans while some investors and defense companies see gains
Six months after the United States and Israel launched military operations against Iran, the most severe economic forecasts have not materialized. While initial fears included a global recession and runaway oil prices, the world economy has shown resilience, though many Americans are feeling the effects in their daily expenses.
Stock markets initially dropped sharply as the conflict began, with the Dow, S&P 500, and Nasdaq all entering corrections. However, by late March, markets rebounded, and major indexes have since posted significant gains. According to the International Monetary Fund, enthusiasm for artificial intelligence has helped offset the economic drag from the war, allowing investors who stayed the course to benefit.
Travel and Fuel Costs Rise
For consumers, the most immediate impact has been at the gas pump and in travel expenses. Disruptions in oil shipments through the Strait of Hormuz pushed Brent crude prices from about $72 per barrel before the war to nearly $120 at their peak. Although prices have since eased, they remain roughly 20% higher than before the conflict began.
Airlines have responded by raising ticket prices, increasing baggage fees, and adding fuel surcharges. Some carriers have reduced flight schedules or canceled planned routes. For example, Lufthansa Group cut 20,000 short-haul flights, and Spirit Airlines ceased operations after years of financial trouble. The International Air Transport Association estimates that jet fuel will cost 70% more on average in 2026 compared to the previous year, making travel less affordable for many Americans.
Push for Clean Energy Accelerates
The war has also accelerated interest in clean energy alternatives. With oil supplies disrupted and prices elevated, sales of electric vehicles (EVs) have reached record highs in several countries. In Singapore, EV sales grew by 110% year-over-year, while New Zealand saw a 180% increase and Colombia a 300% jump. Globally, EVs are projected to make up 29% of all vehicle sales in 2026, up from 25% the previous year, according to the International Energy Agency.
Countries heavily dependent on Persian Gulf oil have increased investments in renewable energy and explored nuclear power options. In Africa, governments are expanding domestic refining and accelerating solar panel installations. Industry experts note that the crisis has prompted faster investment in clean energy than most policy initiatives could achieve.
Food Prices and Hunger Concerns
Rising oil prices have also affected agriculture, particularly through higher fertilizer costs. The Gulf region is a major fertilizer producer, and the war has driven prices up by 44% at their peak, according to the World Bank. Some farmers have reduced fertilizer use, which could impact future harvests and food supply. The United Nations World Food Programme has warned that tens of millions of people, especially in Asia and Africa, could face increased hunger as a result. Higher transportation costs have also made it more difficult for humanitarian organizations to deliver aid.
Defense Companies and Investors Benefit
While many consumers are paying more for essentials, some investors and defense contractors have profited from the conflict. Military suppliers such as Lockheed Martin, General Dynamics, and Northrop Grumman have seen their stock values rise. The Trump family, including President Donald Trump and his sons, have financial interests in several defense companies that have secured contracts related to the war, including drone interceptors and satellite services. According to recent reports, these holdings have increased in value by millions of dollars since the conflict began.
Despite the economic challenges for many households, the overall U.S. economy has avoided the worst-case scenarios predicted at the start of the war. However, the uneven impact means that while some investors and companies have prospered, everyday Americans continue to face higher costs for fuel, food, and travel.
The economic effects of the conflict are likely to continue evolving, with future developments depending on both the course of the war and global energy markets. Policymakers and industry leaders are watching closely as communities adapt to ongoing changes in prices and supply chains.
