Iran War: Impacts on the US Economy and Gas Prices

American enterprises are now contending with nearly US$450 in additional energy costs per household since the US-instigated war with Iran in February, according to analysts from Moody's Analytics.

For supply chain leaders, this translates into mounting pressure on operational budgets as transport, logistics and energy-intensive processes face unprecedented cost inflation.

The figure, US$447.19 per household on average, represents a cumulative burden of close to US$60bn across the country, driven by sharp increases in the price of petrol, diesel and jet fuel over three months of conflict.

For procurement teams managing freight contracts, fuel surcharges and energy-dependent supplier relationships, these figures could signal significant budget overruns ahead.

Mark Zandi, Chief Economist at Moody's, has warned that the situation could get far worse if the fighting continues. "Unless the war ends soon, financially pressed consumers will have no option but to turn more cautious in their spending, threatening the already soft economy," he told CNBC.

Were energy prices to remain at current elevated levels, the average household could face a total additional cost of nearly US$2,000.

For procurement departments, this could mean renegotiating supplier contracts and reassessing total cost of ownership calculations across multiple categories.

Fuel costs reshape procurement strategies

The primary driver of the increased burden is petrol, though diesel presents the more immediate concern for procurement professionals.

Roughly half of the additional household expenditure since the conflict began stems from higher gasoline prices, which stood at an average of US$4.39 per gallon for unleaded fuel as of May 28, representing a rise of more than 47% since the start of March, according to data from motoring organisation AAA.

However, diesel, the lifeblood of commercial logistics, has risen by approximately 47% since early March to around US$5.52 per gallon.

This fuel is used widely in haulage, delivery vehicles and shipping, making it a critical line item for procurement teams managing transportation spend.

American consumers are now paying an additional US$20bn for the fuel, making it the single largest component of the overall energy cost increase after petrol.

The scale of price spike increase varies significantly from state to state, and even county to county.

An NBC News analysis of AAA county-level pricing data showed that Kingsbury County in South Dakota recorded the highest increase in the country, with petrol up 87% to US$4.57 per gallon since the war began, an increase of US$2.13. For organisations with distributed supply chains, this geographic variability could complicate procurement decisions around warehouse locations and distribution strategies.

State-level policy has also played a role in containing costs in some areas. Georgia suspended its 33 cents per gallon state fuel tax on March 15, helping keep its average price increase to US$1.18, the second-lowest in the nation. Illinois, by contrast, recorded the steepest state-level rise in the US, with average prices up US$1.84 per gallon.

Supply chain cost pressures mounting

Beyond ground transport, airline passengers have not been spared either, with rising jet fuel costs contributing nearly US$10bn in additional consumer expenses.

Fares in April were more than 20% higher than a year earlier, according to federal inflation data. For procurement teams managing corporate travel programmes or air freight contracts, these increases could require immediate category reviews and policy adjustments.

The financial squeeze is beginning to show on consumer balance sheets, which could have downstream implications for demand planning.

The personal savings rate fell to 2.6% in April, one of its lowest readings since the global financial crisis, as households continue to draw down reserves built up during the pandemic era.

American credit card debt reached US$1.25tn in the first quarter of 2026, up close to 6% year on year and approaching the all-time record set at the end of 2025, according to the New York Federal Reserve.

Gregory Daco, Chief Economist at EY-Parthenon, described the dynamic in plain terms to CNBC. "Consumers are increasingly facing an income squeeze, which is forcing them to use savings, credit and wealth to sustain their spending patterns," he says.

Personal income growth came in flat in April, missing economists' consensus forecast of a 0.4% increase.

Corporate responses to energy inflation

The strain is beginning to surface in corporate commentary, offering procurement professionals insight into how peer organisations are responding.

Costco reported "record-breaking" petrol volumes at the close of its most recent fiscal quarter, as drivers sought out the wholesaler's competitively priced fuel. This could suggest opportunities for procurement teams to explore bulk fuel purchasing arrangements or corporate partnerships with retailers offering competitive pricing.

McDonald's CEO, Chris Kempczinski, warned in May that consumer spending among lower-income groups "may be getting a little bit worse" as energy costs continue to bite. For procurement teams in consumer-facing sectors, this could signal a need to reassess pricing strategies and supplier negotiations as end-user purchasing power erodes.

Goldman Sachs has projected that elevated energy prices will continue to "erode" consumers' spending power through the rest of 2026, with lower-income households, which spend a proportionally larger share of their budgets on food and energy, expected to feel the effects most acutely.

Moody's analysis also noted that the energy cost increase has more than wiped out the estimated US$384 per household benefit from larger tax returns under US President Donald Trump's fiscal legislation, with Zandi noting that most of the gains from those tax measures have already been used up.