Six months after the U.S. and Israel launched their war against Iran, the most severe predictions of global economic catastrophe have not materialized, though the conflict has exacted an uneven toll worldwide. While investors have largely prospered, consumers are facing increased costs for goods and services.
The war's onset on February 28 generated significant market uncertainty, leading to a decline in stock prices. The Dow Jones Industrial Average, the Nasdaq Composite, and the S&P 500 all experienced losses, with the Dow and Nasdaq entering correction territory. The S&P 500 recorded its worst month since 2022.
However, a market rebound began in late March. The Dow has since gained nearly 19%, the S&P 500 is up almost 22%, and the Nasdaq has surged 27%. If these gains hold through the remainder of 2026, it would mark the fourth consecutive year of gains for all three indexes.
The International Monetary Fund noted in July that the global economy is being influenced by opposing forces: the war's drag on growth, offset by optimism surrounding artificial intelligence.
Oil Prices and Consumer Costs
The most direct economic consequence of the war has been its impact on oil prices. With shipping through the Strait of Hormuz significantly disrupted, Brent crude oil prices rose from approximately $72 a barrel before the conflict to a high of nearly $120. Prices have since decreased but remain about 20% higher than pre-war levels.
This increase in fuel costs affects a wide range of products and services. The International Air Transport Association projects that jet fuel costs will be, on average, 70% higher in 2026 than in 2025. Consequently, airlines have increased ticket prices, baggage fees, and fuel surcharges, while also reducing flight offerings. Some airlines, like Spirit Airlines, have ceased operations, and others, such as Lufthansa Group, have cut thousands of short-haul flights.
"The likelihood that fuel surcharges are going to be rolled back and airfares are going to be brought down is very low over the next few months," said Brett House, an economist at Columbia University. "There is less choice for consumers and less competition between airlines, and therefore, less pressure to rein in fare increases."
Shift Towards Clean Energy
The war's impact on oil prices has also strengthened the case for clean energy alternatives. Sales of electric vehicles (EVs) have reached record highs in several regions, including Singapore (110% year-over-year growth), New Zealand (180%), and Colombia (300%). The International Energy Agency forecasts that EVs will account for 29% of total vehicle sales globally in 2026, up from 25% the previous year, despite declining demand in the United States and China.
Nations heavily reliant on Persian Gulf oil have accelerated their adoption of renewable energy. Southeast Asian countries are increasing their use of renewable energy and exploring nuclear power, while African nations are expanding domestic refining capabilities and installing solar panels. According to Scott Lehmann, a supply chain expert at Sphera, 26 countries and regions have announced clean energy and electrification initiatives in response to the war.
Impact on Agriculture and Humanitarian Efforts
Farmers have been significantly affected by rising fertilizer prices, which peaked in April at 44% higher than before the war, according to the World Bank's price index. Some farmers have reduced their fertilizer usage, potentially impacting future harvests. "If you’re reducing your fertilizer usage right now, it’s in a way borrowing against next year’s soil health," stated Arif Gasilov, a natural resources expert with the Gasilov Group consultancy.
The United Nations World Food Programme has warned that tens of millions could face hunger due to reduced fertilizer exports, particularly impacting Asia and Africa. Higher transportation costs also hinder the WFP's humanitarian operations. "An oil tanker anchored in the Strait of Hormuz can mean one less meal a day for a child in Sudan," said Carl Skau, the WFP's acting executive director. "When oil prices go up, so does the price of flour, rice and vegetables."
The conflict has also had financial implications for individuals connected to the defense industry. Military contractor Powerus, co-founded by Donald Trump Jr. and Eric Trump, secured an Air Force contract potentially worth up to $90 million. Additionally, 1789 Capital Management, where Donald Trump Jr. is involved, holds stakes in military contractors like Anduril and SpaceX, which are reportedly profiting from the war through sales and services to allies. A spokeswoman for 1789 Capital stated that Donald Trump Jr. was not involved in the investment decisions, asserting no "nefarious connection."
President Trump's personal investment portfolio, managed by external advisors, has reportedly increased in value, with holdings in military suppliers such as Lockheed Martin, General Dynamics, and Northrop Grumman. Democrats released a report indicating that Trump's investments in oil and gas stocks have seen gains of up to $15.5 million. A White House spokeswoman maintained that "there are no conflicts of interest" and that "President Trump only acts in the best interests of the American public."