The Price of War: A Perspective on Why the Iran Conflict Demands a True Energy Emergency Response

Since the United States and Israel launched joint strikes on Iran on February 28, 2026, the American economy has been hit by an energy shock of very significant proportions. By March 9, Brent crude had surged past $119.50 a barrel — its highest level since 2022 — while West Texas Intermediate briefly touched $119.48. U.S. crude futures have climbed more than 60% from their pre-conflict level of roughly $70. The national average for a gallon of regular gasoline jumped from $2.98 on February 26 to $3.47 by March 9, according to AAA, and analysts are projecting it could approach $5 or higher by the end of March. This conflict is playing out in a region responsible for 20% of global oil supply — a disruption more than twice the scale of the Suez Crisis of 1956.

What do these numbers really mean? Every ten-cent increase at the pump costs American households roughly $14 billion per year in aggregate. This is a tax that falls hardest on working families, farmers, rural communities, and small businesses — the people least able to absorb it. The question is not whether economic pain will come from this conflict. It will. The question is whether we treat this like the genuine energy emergency it is and respond with every tool at our disposal.

The Strait of Hormuz: A Chokepoint with No Quick Fix

The Strait of Hormuz is only 21 miles wide at its narrowest point, and its navigable shipping lanes are just 2 to 3 miles across in each direction. Yet roughly 20 million barrels of oil per day — about 20% of global petroleum consumption and the world’s LNG exports — transit this corridor. Since the strikes began on February 28, commercial shipping through the strait has effectively ceased. By March 2, Iran’s Revolutionary Guard had officially declared the strait closed and threatened to fire on any vessel attempting passage, resulting in major carriers including Maersk, CMA CGM, and Hapag-Lloyd suspending all transits.

But the disruption extends well beyond shipping lanes. Iranian retaliatory strikes have directly damaged energy infrastructure across the Gulf region. On March 3, Qatar declared force majeure on its LNG exports after drone attacks struck the Ras Laffan Industrial Complex — the world’s largest LNG export facility — and ceased production entirely. Qatar alone accounts for approximately 11% of global urea exports and 20% of the world’s LNG supply. Saudi Aramco’s Ras Tanura refinery and export terminal — one of the largest in the world — has also shut down following attacks, with no public details on the extent of structural damage. Kuwait, OPEC’s fifth-largest producer at roughly 2.6 million barrels per day, announced production cuts on March 8 as storage fills and export routes remain closed.

Here is the critical point, and it deserves far more attention: even if hostilities were to cease immediately, this critical infrastructure will not snap back to full capacity. Rystad Energy has pointed out that oilfields forced to shut in can take weeks or even months to be restored to prior production levels, depending on the field’s age and the nature of the shutdown. QatarEnergy’s CEO told the Financial Times that the country cannot restart LNG production until the conflict ends completely. JPMorgan estimates that production cuts could exceed 4 million barrels per day if the strait remains closed much longer. Even in an optimistic scenario where hostilities end soon, the recovery timeline for damaged refineries, LNG terminals, and export infrastructure will be well beyond what most people expect.

American Production Does Not Mean American Price Immunity

It is worth celebrating that the United States is the world’s largest oil and natural gas producer. Domestic production is a powerful strategic asset, and it provides a meaningful buffer that many countries lack. Just look at Europe. But there is a persistent misconception — shared, in fairness, across both parties over the years — that domestic production insulates American consumers from global price shocks. It does not, and it will not.

Oil and natural gas are globally traded commodities. Their prices are set on international markets. When one-fifth of global supply is disrupted, the price of every barrel rises — regardless of where it was pumped. The EIA estimates that the United States imported only about 0.5 million barrels per day from Persian Gulf countries in 2024, representing just 2% of U.S. petroleum liquids consumption. Yet WTI crude surged nearly 30% in the first week of the conflict. Whether prices remain at these levels, fall back somewhat, or even rise further, we can expect American producers to benefit from higher prices. Make no mistake, though, higher prices will come at the cost of American consumers and the broader economy’s health.

The numbers are remarkable and stark. For the week ending March 7, U.S. crude posted its largest weekly gain in the history of futures trading dating back to 1983, surging 35.6%. Gasoline prices rose by roughly 59.8 cents per gallon nationally between February 26 and March 11. Diesel futures hit a two-year high on March 5, raising costs for every truck on every highway moving every product Americans buy. And we are likely still in the early innings. Kpler has warned that oil could reach $150 a barrel by the end of March if Hormuz traffic does not resume. The Qatari Energy Minister has suggested prices could hit $150 if all regional producers are forced to halt output.

The Fertilizer Shock: From the Strait of Hormuz to American Dinner Tables

Naturally enough, oil has dominated the headlines, but the downstream effects of this turmoil on fertilizer and food may prove even more consequential for everyday Americans. Synthetic nitrogen fertilizer — the foundation of modern farming productivity — is manufactured from natural gas via the Haber-Bosch process. Approximately one-third of all globally traded nitrogen fertilizer transits the Strait of Hormuz, and nearly 45% of global urea shipments originate from Persian Gulf facilities.

The price impact of the conflict has been immediate and severe. Urea prices at the port of New Orleans jumped from $475 per ton on February 28 to as high as $550 per ton by March 6. Phosphate prices jumped approximately $30 per ton over the same period. Anhydrous ammonia and UAN prices also rose. Global fertilizer markets were already tight before this conflict, with China restricting exports to ensure domestic supply and European producers cutting output due to already high energy costs.

The timing of this supply disruption could not be worse. Northern Hemisphere farmers are entering spring planting season. If nitrogen supplies do not reach the Corn Belt in time, analysts warn that some farmers may shift acreage from corn to soybeans, tightening grain supplies further. India — which sources more than 40% of its urea and phosphatic fertilizer imports from the Middle East — faces acute exposure. Unlike oil, there is no strategic fertilizer reserve to release. The buffers are razor-thin.

The Food Policy Institute has warned of long-term food price increases driven by disrupted fuel and fertilizer markets. These concerns were recently echoed in an appeal to the White House from Zippy Duvall, President of the American Farm Bureau Federation, who warned that ​“failure to act could lead to disruptions to the food supply chain not seen since 2022 when food price inflation reached 40-year highs.”

For American families already contending with elevated grocery costs, this will be another blow — and one with a long tail. Even if the conflict ends soon, the supply chain damage to fertilizer production and distribution will take months to unwind, arriving just as this year’s crops are planted and prices are set.

What the Stock Market Is — and Isn’t — Telling Us

Some observers have pointed to the stock market as evidence that the economic damage from this conflict will be manageable. During the week of March 3 – 7, the S&P 500 fell modestly — roughly 2 – 3%—before partially recovering, albeit with a high degree of volatility.

But even if the headline index holds up for a time, I believe it is a misleading barometer of broad economic health and of the real consequences of the conflict. The S&P 500 is heavily concentrated in mega-cap technology companies whose businesses have less direct exposure to commodity input costs than many businesses. An AI investment narrative continues to dominate equity markets. Defense stocks have rallied. Palantir surged on the expectation of expanded military intelligence contracts. These dynamics mask a very different broader reality on the ground.

The sectors that reflect the experience of most Americans tell a very different story. The Russell 2000 index of small-cap companies — businesses far more sensitive to input costs and consumer spending — declined 2.7% on the afternoon of March 5 alone. Airline stocks have fallen 10% to 15% since the conflict began. Boeing and Caterpillar led the Dow lower. AIG is down more than 7% year-to-date as maritime risk premiums explode. Bloomberg called the week of March 3 – 7 the worst combined week for stocks and bonds since the tariff stress of April 2025, as the inflationary shock of an oil supply disruption pushed Treasury yields higher instead of lower — the opposite of the traditional crisis playbook.

This matters because the industries getting hit hardest — transportation, agriculture, manufacturing, small business — are the ones that employ the most Americans and most directly affect household budgets. The S&P 500’s relative resilience is a story about Big Tech, not about the economy most people live in.

This Is the Energy Emergency. Let’s Act Like It.

When this administration took office, the President declared a national energy emergency. That declaration was made in a very different context — aimed at unleashing domestic fossil fuel production. But if there was ever a moment that justified the label, it is now. This is the energy emergency. And in an emergency, you don’t limit yourself to a subset of solutions. You pull every lever you have.

This is not about left versus right. It is not about re-litigating old arguments over climate policy or fossil fuel subsidies. It is about a basic, urgent reality: an economy that depends too heavily on any single class of globally traded, geopolitically volatile commodity is structurally fragile. Like it or not, that is the case. And this fragility will cost Americans real money — at the pump, at the grocery store, and across the nation’s broader supply chains.

Consider some very simple arithmetic. When oil was trading at $65 – 70 a barrel and natural gas was cheap, it was possible to argue that investment in renewable energy was a luxury — nice to have, but not essential. That argument has collided with a very different reality. With the very real possibility of oil at or above $100, every kilowatt-hour of electricity generated by domestic wind or solar is a kilowatt-hour whose cost is not hostage to the Strait of Hormuz. Every electric vehicle on the road is a vehicle whose fuel cost did not just surge 20%. Every industrial facility powered by domestically generated renewable energy will be better insulated from the chaos roiling global energy markets. The International Renewable Energy Agency reported in 2025 that more than 91% of new renewable energy projects globally are competitive with or cheaper than their fossil fuel alternatives. And that was before this crisis repriced the risk of dependence.

I am not arguing against oil and gas here. Absolutely not. American fossil fuel production is essential — both as a strategic asset and as a critical economic engine in many states across the country. Domestic producers will play a key role in cushioning this very shock. What I am arguing is that a true energy emergency demands a true emergency response: one that aggressively supports oil, gas, nuclear, wind, solar, battery storage, geothermal, and efficiency simultaneously. All the arrows in our quiver. Let’s, for once, try to put the polls aside. Because it is the only rational response to a world where a 21-mile-wide strait of water 6,000 miles away can hold the American economy hostage.

We must stop trying to pick winners. In particular, we need to stop our politicians from trying to pick winners. Instead, we need our politicians to mandate the nation to build an energy portfolio so diversified that no single point of failure — no single strait, no single region, no single commodity — can cause systemic economic damage. The traditional framing of this issue — the right resists because it includes clean energy, the left resists because it includes oil and gas — is a folly, a luxury we can no longer afford. In an emergency, you do not argue about which fire truck to send. You send them all.

Recent policy has tilted heavily toward fossil fuels and against renewables — slashing tax credits, freezing wind permitting, and imposing new barriers to clean energy development on federal lands. Whatever the merits of those individual decisions in calmer times, this crisis exposes the cost of reducing optionality. A color-blind approach to energy — one that judges every source by what it can deliver, not by which political tribe claims it — would make the United States an even more powerful, an even more formidable nation. 

What Leaders Should Do Now

The immediate priority is managing the current shock: releasing strategic petroleum reserves as necessary, securing shipping lanes, and working toward a resolution of the conflict. But leaders should also use this moment — this genuine emergency — to commit to building long-term resilience.

If this administration is serious about its energy emergency declaration, it should widen the aperture of that emergency to include every domestic energy source. Maintain or expand renewable energy tax credits — not as a concession to the other side, but as a strategic investment in supply diversification and a means of buttressing American economic power. Streamline permitting for all energy projects — wind, solar, and nuclear alongside oil and gas, and invest in fertilizer production independence to reduce US agricultural vulnerability to exactly this kind of shock.

None of this requires abandoning fossil fuels. It requires acknowledging what this crisis has made painfully clear: energy resilience comes from systemic breadth and optionality, not from depth in any single source. The countries that weather these storms best are those with the most diversified energy portfolios. Whether our leaders like it or not, China has very proactively leaned into using an all-of-the-above energy strategy to diversify its supply base. America has more resources and tools at its disposal to do the same. Now is the time — if our leaders choose to lead. Put simply, we should not put all our eggs in one basket.

The Bill Is Coming Due

The economic pain from this war will not be distributed evenly. It never is. Wealthy Americans with diversified portfolios may barely notice. Working families filling up their gas tanks, heating their homes, and buying groceries will feel it sooner and more significantly. Farmers facing 50% increases in fertilizer prices while crop prices remain suppressed by global grain oversupply face a devastating squeeze. Small businesses whose margins depend on diesel, propane, and shipping costs have no hedge against a $100+ barrel of oil.

Every sustained $10 increase in oil prices adds an estimated 0.4% to global inflation and reduces global GDP growth by 0.1%-0.2%, according to the IMF. Former Federal Reserve Chair Janet Yellen has warned that the war’s impact on oil markets could complicate the Fed’s inflation fight and drag on economic growth.

We have the tools to build a more resilient energy economy. We have the domestic production, the technological capability, the renewable resources, and the economic incentive. What we need is the will — not from one party or the other, but from leaders willing to treat a real emergency like a real emergency. This conflict in Iran did not create America’s energy vulnerability. But it is exposing it. Now is the time to ensure American dominance moving forward, and that means using the levers we have to reduce our dependence on others’ energy resources. Let’s not let a crisis go to waste. Let’s build a truly powerful economy in the US by unleashing the potential of all our energy options, and let’s do it now!