(PCC)The world was shocked when Israel sprang into action with preemptive strikes against not only potential nuclear sites but also the people behind them. The escalating conflict between Israel and Iran has sent shockwaves through global markets, underscoring how quickly geopolitical tensions can rattle economies and affect everyday consumers. On Friday, oil prices surged, gold soared, and investors braced for turbulence as Israel launched attacks on Iranian nuclear and military targets.

While market reactions may be short-lived, the broader economic implications could be more enduring, particularly for energy prices, inflation, and household budgets.

Oil prices are rising, and some predict gas prices to follow. The Trump administration stated this is merely a temporary blip, and it may indeed be. Either way, it clearly shows the US dependency on foreign oil, especially Iran’s oil.

Iran is a major oil producer, and its exports, largely directed to China, play a key role in the global energy market. Any disruption could force China to look elsewhere, tightening global supply and driving up costs.

According to Patrick De Haan, head of petroleum analysis at GasBuddy, U.S. gas prices could rise by 5 to 15 cents per gallon in the coming weeks. Diesel may jump by as much as 30 cents per gallon. That would end a welcome period of relief for American drivers, who have enjoyed lower gas prices compared to a year ago.

As of Friday, the average price for a gallon of gas in the U.S. stood at $3.13, down from $3.46 a year ago and significantly lower than the record high of $5.02 set in June 2022. But the trend may reverse if tensions in the Middle East intensify.

Iran’s Strait of Hormuz matters to Israel and the US. A critical flashpoint is the Strait of Hormuz, a narrow waterway through which nearly 30% of global oil trade flows. If the conflict escalates and threatens this vital route, it could spark further disruptions in the global supply chain, impacting oil, gas, and other trade goods.

Even the perception of instability in this area can rattle energy markets, as companies and governments anticipate possible shipping delays, insurance hikes, or outright blockades.

In the wake of Friday’s events, many economists expect the Federal Reserve to leave interest rates unchanged at its upcoming meeting. Even prior to the attack, policymakers were inclined to adopt a cautious approach to interest rate adjustments.

While a new wave of energy-driven inflation might eventually compel the Fed to act, it’s unlikely to prompt immediate rate hikes. High borrowing costs are already a burden on consumers, and central bankers are wary of tightening further unless absolutely necessary.

Higher energy prices can ripple across the economy, affecting everything from groceries to shipping. This potential inflationary pressure comes at a fragile moment for the global economy, which is still recovering from supply shocks and high interest rates.

Marc Giannoni, the chief U.S. economist at Barclays, cautioned that inflation is likely to increase, stating, “It’s a matter of when, not if.” And with large retailers like Walmart already raising prices due to tariffs and supply chain costs, further increases in oil could exacerbate the issue.

Back in December, Gregory Daco, chief economist at EY-Parthenon, modeled the potential fallout from a direct Israel-Iran conflict. He classified it as a “significant escalation scenario,” one that could trigger a spike in oil prices, intensify global inflation, disrupt supply chains, and potentially push the world into recession.

“What’s in your wallet?” is a TV marketing phrase, but it is a truism. The effects of the Israel-Iran conflict may be felt by most Americans at the gas pump and on utility bills before they impact their investment portfolios. Historically, market reactions to geopolitical crises are short-lived, so now likely isn’t the time to panic about your retirement accounts or long-term investments.

But consumers should be prepared for rising energy costs, potential price hikes on everyday goods, and continued economic uncertainty. Budgeting wisely and monitoring developments in the Middle East will be key in the weeks ahead.

Geopolitical instability is once again reshaping the economic outlook. The Israel-Iran conflict brings immediate concerns about energy prices and inflation and longer-term worries about global recession risks if tensions escalate further. While policymakers and central banks weigh their options, consumers should brace for ripple effects, especially in fuel and transportation expenses, as the world watches this unfolding crisis.

Final Word: War is always a sad event, but in this case there may be a silver lining. The nuclear threat of Iran is soon over, but Iran’s bad news may be good for business.

Disclaimer: This article is for informational and educational purposes only and should not be construed as financial, investment, or legal advice. The content reflects the author’s opinions based on personal research and experience and may not be suitable for your individual circumstances. Always conduct your own due diligence and consult with a qualified financial advisor, accountant, or legal professional before making any financial decisions. The author and publisher assume no responsibility or liability for any errors or omissions in the content or for any actions taken based on the information provided.