Full Breakdown
Economic Fallout of the U.S.–Israel War on Iran
5/12/2026, 1:58:43 AM
War Triggers Global Economic Shock
U.S. and Israeli strikes on Iran on 28 February 2026 prompted Iranian retaliation and a closure of the Strait of Hormuz, pushing Brent crude from about $70 to $104–$114 per barrel and raising energy costs.
Economic Impact
A National Association for Business Economics (NABE) survey found 54 percent of firms reporting higher energy costs and over two-thirds seeing material expense spikes—the steepest since July 2022. Forty-eight percent are passing some costs to customers, 16 percent plan price hikes, and 25 percent expect to curb hiring or investment. Only 13 percent anticipate profit growth, the lowest since 2023. Over 80 percent of S&P 500 firms reporting this quarter beat earnings expectations, with FactSet projecting near-28 percent earnings growth, driven by AI gains. Half of surveyed economists see a greater than 25 percent chance of a U.S. recession within a year.
Official Statements & Responses
President Donald Trump told a business audience that tax cuts and deregulation have generated “record business” and a “roaring” economy, and he expects energy costs to fall “very substantially.” Martha Moore, chair of the NABE survey and economist at the American Chemistry Council, noted steady sales, rising material costs, shrinking profit margins, and heightened recession concerns among economists.
Criticism & Opposition
Economists warn that rising energy and material costs, combined with supply-chain strains, raise the probability of a U.S. recession, with half of respondents seeing a >25 percent chance within a year.
On-the-Ground Reports from the United Kingdom
In London, restaurant owner Dilman Mahmoud says saffron prices have jumped from £1,200 to £2,100 per kilogram and chickpeas from £33 to £46 per box. Moin Tiyari of Zoetic Ltd reports bulk shipments limited to 100-200 gram batches because of flight cancellations and internet shutdowns.
Conflicting Reports & Gaps
Oil price reports differ, citing Brent at $104.21 in one source and $114 in another. Profit outlooks also diverge: NABE sees low profit growth, while FactSet forecasts near-28 percent earnings expansion for S&P 500 firms. Home-sale data remain limited.
Verbatim Quotes
- “Sales over the past three months were steady, but materials costs increased and profit margins declined,” — Martha Moore, chair of the NABE survey, American Chemistry Council
- “We need to increase the prices… we need to pass it to the customers, but I didn't do it. I'm still not doing it.” — Dilman Mahmoud, owner of Sadaf restaurant, London
- “record business,” — Donald Trump, President of the United States
- “We will never bow our heads before the enemy, and if talk of dialogue or negotiation arises, it does not mean surrender or retreat.” — Masoud Pezeshkian, Iranian President
What’s Next
President Trump will travel to China to press President Xi Jinping for influence over Iran after rejecting Tehran’s cease-fire proposal. Analysts expect ongoing Strait of Hormuz volatility to keep oil prices and Treasury yields high, shaping corporate pricing and consumer spending.
