Iran War Oil Shock Threatens U.S. Inflation and Jobs

Economists warn that intensifying conflict in the Middle East and fresh attacks on energy infrastructure have pushed Brent crude briefly above $119 a barrel and could drive oil toward or even past prior record highs, with U.S. gasoline and diesel prices already spiking. Average U.S. gas hit about $3.88 a gallon on Thursday—nearly $1 more than before the Iran war—while diesel has topped $5, and jet fuel costs are rising enough that some airlines are lifting fares. Oxford Economics estimates every 1‑cent increase in gasoline prices cuts U.S. consumer spending by roughly $1.5 billion per year, and its modeling shows sustained Brent at $140 could trigger layoffs and a higher unemployment rate, even if the U.S. avoids a full recession. Pantheon Macroeconomics projects that oil at $150 for three months could push the Consumer Price Index back up to around 6% annually, reversing much of the recent progress on inflation. Analysts stress that while the U.S. is more insulated than Europe and Asia because it produces more of its own energy and spends a smaller share of income on fuel, lower‑income Americans would still bear the brunt through higher pump prices and knock‑on increases in food and goods shipped by truck and barge.