The war involving the United States, Israel and Iran could become a political liability for US President Donald Trump as rising energy prices and public opposition threaten to erode support for his administration, reports The Guardian.
The conflict has not yet badly shaken financial markets, but its economic impact is becoming clearer through higher fuel costs that are likely to filter through transport, food and retail prices across the United States.
Trump has remained publicly confident.
“Short term oil prices, which will drop rapidly when the destruction of the Iranian nuclear threat is over, are a very small price to pay for U.S.A., and World, Safety and Peace,” he wrote on social media.
“ONLY FOOLS WOULD THINK DIFFERENTLY!”
His confidence has been helped by the relative resilience of the US economy.
Despite sweeping tariffs, cuts to the federal workforce, deportations of immigrant workers and repeated attacks on the Federal Reserve, leading economists only weeks ago were still considering whether the economy could achieve a soft landing after a period of high inflation.
The United States is also better shielded than many advanced economies from an energy shock.
Imports of crude have fallen sharply since domestic production surged in the early 2000s, while natural gas has taken a larger share of the country’s energy mix.
Oil now makes up about 38 per cent of US energy consumption, almost 10 percentage points less than during the 1973 oil crisis, when Arab oil producers halted shipments to Washington over its support for Israel in the Yom Kippur war.
Natural gas now accounts for about 36 per cent, up from roughly 30 per cent at that time. Even after Iran disrupted traffic through the Strait of Hormuz, through which about 20 per cent of the world’s oil shipments pass, US markets have shown limited alarm.
The S&P 500, Trump’s preferred gauge of economic strength, remains close to record highs. But that insulation may not spare him politically.
The war has been deeply unpopular with the American public from the start, an unusual development in a country that has often rallied behind military action abroad.
That opposition could harden as households absorb the economic fallout. The United States may produce more of its own energy than many peers, but domestic consumers still pay prices shaped by global oil markets.
Regular petrol has already climbed above $3.50 a gallon, its highest level since Trump returned to office.
Government forecasts suggest retail petrol prices will not return to their 2025 levels until the autumn of 2027, while diesel is expected to stay above its pre-war level at least until the end of next year.
That matters well beyond the forecourt. Trucking companies are likely to pass higher diesel costs to customers.
Farmers facing dearer fuel and fertiliser are likely to push up food prices.
Retailers and airlines also face higher operating costs as fuel bills rise. The pressure is likely to reappear in inflation data.
Inflation slowed to 2.4 per cent in February from a year earlier, but the jump in energy prices threatens to reverse some of that progress.
That, in turn, could complicate the case for interest-rate cuts by the Federal Reserve. The administration has already begun looking for ways to ease pressure on oil markets.
It has proposed insuring tankers and escorting them through Hormuz, waived sanctions on some Russian oil exports and is considering steps to expand Venezuelan oil production to fill supply gaps.
But reversing the biggest jump in oil prices in more than three decades will require more than emergency measures.
Either the war must end, or Iran’s capacity to threaten tankers moving through Hormuz must be sharply reduced.
Trump has spoken of Tehran’s “unconditional surrender” while also suggesting the war is largely complete.
Yet neither outcome appears simple.
Despite heavy damage to Iranian infrastructure, thousands of fighters tied to the Revolutionary Guards and the Basij remain able to resist and help sustain the government in Tehran.
That leaves Trump with unappealing options: back away from demands for surrender and claim a narrower victory, keep up air strikes, or escalate further, including with ground forces. None offers a quick end.
If the conflict drags on, the economic pain is likely to linger as well. And that may prove more damaging to Trump than events on the battlefield, because American voters tend to react sharply when war abroad pushes up prices at home.
