Investors prosper and consumers pay as the Iran war exacts an uneven economic toll six months in.
Markets shrug off chaos
When the U.S. and Israel began bombing Iran in February, Wall Street braced for disaster. Oil prices spiked and the Dow and Nasdaq entered corrections, marking the worst month for the S&P 500 since 2022. Yet the market has since reversed course. The Dow gained nearly 19% from its March low, the S&P is up almost 22%, and the Nasdaq surged 27%. The International Monetary Fund notes the economy is caught between the drag of war and the boost from artificial intelligence enthusiasm. If these gains hold through the end of the year, all three indexes would post their fourth consecutive year of gains.
While Main Street feels the pinch of higher prices, Wall Street seems largely unbothered. The uncertainty that typically spooks investors appears to have been absorbed by the rally. The financial system has not collapsed, but the path forward remains difficult.
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Travelers face higher costs
The conflict has created a clear divide between those with financial flexibility and those who must spend on necessities. For anyone needing to travel, the price impact is immediate. Jet fuel costs are expected to average 70% higher than in 2025. Airlines have responded by raising ticket prices, hiking baggage fees, and adding fuel surcharges while cutting routes. Lufthansa Group removed 20,000 short-haul flights from its schedule, and Spirit Airlines effectively ceased operations. Even if oil prices ease, economists say fuel surcharges are unlikely to be rolled back soon.
The bottleneck at the Strait of Hormuz, where tanker movement slowed to a crawl, sent Brent crude from about $72 a barrel to nearly $120. Although prices have retreated slightly, they remain roughly 20% above prewar levels. This cost is baked into the price of everything from cosmetics to crayons, but it hits transportation the hardest. Consumers now face less competition and fewer options, which leaves little room for relief.
Clean energy gains momentum
In a surprising twist, the war has accelerated the adoption of electric vehicles. With fuel prices climbing and supply chains disrupted, the case for clean energy has grown stronger. Singapore saw year-over-year EV growth of 110%, New Zealand hit 180%, and Colombia recorded a 300% increase. The International Energy Agency projects EVs will account for 29% of global sales in 2026, up from 25% last year.
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This shift is particularly evident in regions dependent on Persian Gulf oil. Southeast Asian nations are expanding renewable energy use, and African countries are accelerating solar panel installations. Scott Lehmann, a supply chain expert at Sphera, estimates 26 countries have announced clean energy measures in response to the crisis. The emergency has forced investment faster than any policy framework could have achieved on its own.
War often creates strange bedfellows. While the conflict destabilizes traditional energy markets, it pushes governments and consumers toward alternatives. The transition away from fossil fuels, usually a slow political process, has gained a sense of urgency.
The hidden cost of food
While global markets and wealthy nations debate the economic fallout, the war’s impact on food security is far more visceral. The Gulf region is not just a major oil producer but also a key supplier of fertilizer. As fertilizer prices surged 44% in April, farmers were forced to make difficult choices. Reducing usage now risks damaging soil health for next year’s harvest.
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The United Nations World Food Programme warns that tens of millions of people could be pushed into hunger. Carl Skau, the agency’s acting executive director, testified that the “suffocation of fertilizer exports” has hit Asia and Africa hard. Higher transportation costs are also hindering humanitarian deliveries. The connection is direct: an oil tanker idling in the Strait of Hormuz can mean one less meal a day for a child in Sudan. As fuel prices rise, the cost of flour, rice, and vegetables climbs with them.
Profit from conflict
The economic toll of the war has been estimated in the hundreds of billions of dollars, but some entities are benefiting directly from the fighting. The family of President Donald Trump has seen their personal finances rise alongside the conflict. His investment portfolio, managed by outside managers, has accumulated significant stakes in military suppliers like Lockheed Martin, General Trends, and Northrop Grumman. Oil and gas stocks in his portfolio have increased in value by as much as $15.5 million.
