One War, Every Price Tag: How the US-Iran Conflict Is Reshaping Fuel Costs, Food Security, and the Global Economy
Summary
The 2026 war between the United States, Israel coalition and Iran has triggered one of the most severe global fuel and economic crises in decades, sending Brent crude soaring above $106 per barrel a 40% surge from pre-war levels and LNG prices up nearly 60%. The closure of the Strait of Hormuz, through which approximately 20% of global oil and gas supplies transit daily, has upended energy markets, grounded airline routes, inflated food prices, created fertiliser shortages, and threatened recession-like conditions across Asia, Africa, and Europe. Countries from Pakistan to the Philippines have declared energy emergencies, while Nigeria simultaneously an oil producer and a fuel importer faces a uniquely complex exposure to a crisis that shows no signs of swift resolution.
When the United States and Israel launched strikes on Iran in early 2026, the military objectives were defined in the language of security and deterrence. But the economic consequences have been written in the language every ordinary person understands: the price at the pump, the cost of a flight, the bill at the grocery store, and the growing fear that the worst is still ahead.
The Strait of Hormuz: The World’s Most Dangerous Chokepoint
The closure of the Strait of Hormuz through which around 20% of the world’s oil trade passes and attacks on energy infrastructure in Iran and several Gulf Cooperation Council countries led to a large disruption in global oil supplies. The Strait is not merely an oil transit route. Roughly 20 million barrels per day of crude oil and oil products moved through the strait in 2025, as did roughly one fifth of global LNG trade in 2024. Since the opening strikes on Iran, commercial traffic through it has been severely disrupted insurers, shipowners, and energy traders now see it as functionally impaired.
The consequences cascaded almost immediately. As of mid March 2026, Brent crude the global industry benchmark was priced at $106 per barrel, up more than 40% from $72 per barrel on February 27. LNG prices have risen even more sharply by almost 60% since the start of the war. On March 2, QatarEnergy suspended its LNG production after an Iranian drone attack, straining the global LNG market. Qatar supplies 20% of the world’s LNG. On March 18, Iran struck Qatar’s Ras Laffan Industrial City LNG complex, causing a 17% reduction in Qatar’s LNG production capacity damage estimated to require 3 to 5 years to fully repair. LNG spot prices in Asia subsequently increased by over 140%.
Fuel Prices: From Petrol Stations to Airline Tickets
At the consumer level, the impact has been swift and broadly felt. US gas prices hit $4 per gallon on March 31, 2026 a 30% surge driven directly by the war with Iran. Jet fuel prices, which were about $85 to $90 per barrel before the attacks on Iran, soared to $150 to $200 a barrel a doubling that has forced airlines across the globe to raise ticket prices sharply. Australia’s Qantas, Scandinavia’s SAS, Air New Zealand, and India’s IndiGo and Air India have all announced airfare hikes, blaming the abrupt spike in jet fuel costs. Flights from Asia and Australia toward Europe and the US have also been taking longer routes to avoid Gulf airspace closures, further bumping up ticket prices.
Much of the world has been affected by panic buying and severe disruption to the distribution of petroleum products, LNG, and urea used for fertiliser. Several countries have been forced to impose drastic rationing measures: Myanmar restricted private vehicle use to alternate days, Nepal announced it would refill only half of empty gas cylinders, and Pakistan’s government introduced a four days work week for public offices and closed educational institutions for two weeks to conserve fuel. On March 24, the Philippines became the first country to formally declare a state of national energy emergency.
Food Prices and the Fertiliser Crisis
The conflict has not stopped at fuel pumps. There are ongoing concerns about food security related to fertiliser shortages and costs a secondary crisis that is proving as damaging as the direct fuel shock. The Strait of Hormuz is also critical for fertiliser access and high tech supply chains, not just oil. Wheat prices have moved higher, and analysts have warned that less wealthy, food and fuel importing countries could face acute stress if the conflict continues.
Brazil, which accounts for nearly 60% of global soybean exports and is a major exporter of corn and sugar to the Middle East, faces a sustained fertiliser shortage that could compel farmers to reduce usage, causing a drop in crop yields with significant implications for global food security. China, responding to the strangulation of sulfuric acid exports from the Persian Gulf, halted its own sulfuric acid exports to secure internal supply directly impacting copper mining in Chile, where approximately 20% of copper processing depends on acid imports from China.
The Macro Picture: Inflation, Stagflation, and Recession Risk
The war’s cascading economic fallout is now radiating well beyond the Gulf, reshaping global commodity markets, food systems, industrial supply chains, financial conditions, and geopolitical alignments potentially for years to come. Economists predicted inflation peaking at over 4% year on year in the eurozone, 3% in the US, and 2.5% in Japan projections that have led the European Central Bank to raise interest rates and the Bank of Japan to tighten policy.
The economies of most countries are expected to be adversely affected by the crisis, leading to inflation and heightened risks of stagflation and recession. Bangladesh is among the worst hit economies, projected to experience severe impact on GDP growth inducing recession like conditions.
Who Gains, Who Loses
The crisis has not been uniformly devastating. The US benefits from surging oil prices as an energy powerhouse US exports of crude and petroleum products rose to nearly 12.9 million barrels a day in April 2026. Canada’s oil producers have similarly seen high profits as global buyers scramble for alternatives to Gulf supplies. The conflict has also bolstered the necessity for renewable energy, as solar and wind power reduce vulnerability to external supply disruption with fluctuating oil prices making renewable energy significantly more cost competitive.
What This Means for Nigeria
Nigeria occupies a uniquely paradoxical position in this crisis. As a crude oil producer, it stands to benefit from elevated global oil prices higher Brent prices directly improve government revenues and NNPC’s export earnings. But as a country that imports the overwhelming majority of its refined petroleum products, Nigeria simultaneously faces the consumer side costs of the same price surge. Jet fuel prices for Nigerian carriers have soared. LNG prices affecting industrial energy users have spiked. And the global fertiliser disruption threatens agricultural input costs at a time when food inflation is already one of the country’s most acute welfare challenges.
The naira, already under pressure from a complex set of domestic factors, faces additional strain from the global inflationary environment that the war has generated higher import costs across virtually every category of goods compound an exchange rate challenge that the CBN is managing with limited room to manoeuvre. The government’s fiscal position, while boosted by higher oil revenues, must be weighed against the import cost inflation and energy sector pressures that the same war is generating on the other side of the ledger.
Analysis
The US-Iran war is delivering what the World Economic Forum has described as a structural shock to the global economy arriving not at a moment of strength but at a moment of fragility, when post pandemic supply chains had only partially recovered, when inflation was only partially tamed, and when the geopolitical architecture that underpinned decades of relatively stable energy markets was already under severe strain from the Russia-Ukraine conflict. What makes this crisis different from previous oil shocks is its multi-dimensional character. Previous crises 1973, 1979, 1990, 2022 were primarily oil supply disruptions. This one is simultaneously an oil shock, an LNG shock, a fertiliser shock, a shipping disruption, an aviation crisis, and a food security emergency. Each of those dimensions amplifies the others: higher fuel costs raise food transport costs, which raise food prices, which feed inflation, which forces central banks to tighten policy, which slows growth, which reduces the capacity of governments to fund the social protection their populations need when costs are rising fastest. What begins as a battlefield shock hardens into a geoeconomic one. Iran’s strategy has been clearly articulated in its targeting choices not simply military, but economic, striking LNG facilities, fuel tankers, and shipping lanes with the explicit objective of raising the global cost of the war until pressure for de-escalation becomes irresistible. Every week the Strait remains functionally impaired is another week of compounding damage to the global economy damage that falls most heavily, as always, on the countries least equipped to absorb it. The ceasefire discussions that briefly moved oil below $100 per barrel offered a glimpse of what resolution would mean for global markets. The speed with which prices responded to that news is itself a measure of how much the world needs this war to end.
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