Podcast Summary: "Will Gas Prices Go Up Because of the Iran War?"

Podcast: The Journal by The Wall Street Journal & Spotify Studios
Date: March 4, 2026
Hosts: Jessica Mendoza, Ryan Knutson
Guests: Rebecca Fungi (WSJ energy reporter), Harriet Tory (WSJ U.S. economy reporter)

Episode Overview

This episode explores the immediate fallout and likely global economic consequences sparked by war between Iran, the U.S., and Israel, focusing on whether the conflict will drive up gas prices for American consumers. Key topics include the closure of the Strait of Hormuz, disruptions in oil production throughout the Middle East, volatility in global energy markets, and anticipated downstream effects on the U.S. economy and inflation.

Key Discussion Points & Insights

1. The Closure of the Strait of Hormuz and Initial Shock

[00:05 - 01:52]

• Critical Waterway Closes: After allied strikes on Iran, ships are warned to avoid the Strait of Hormuz, a chokepoint for about 20% of the world’s daily oil supply.
  • Rebecca Fungi: "Closing it, it's like the doomsday scenario. So my first reaction is like, oh no, here we go." [01:01]
• Immediate Impact: Oil and gas prices jump dramatically, e.g. U.S. oil rises 7.6% to $72.12/barrel; Brent crude up 8.6% to $79.11/barrel.
• Broader Market Fears: Stock markets tumble on concerns about a protracted conflict impacting oil supplies and inflation globally.

2. How the Blockade and Attacks Escalated

[04:03 - 10:14]

• Chaos Among Traders: Oil traders and brokers work nonstop to monitor and react to market volatility.

  • Rebecca Fungi: "It was never easier to find people who are working... they just needed to be there." [04:13]

• Scale of Disruption: Normally, the Strait of Hormuz sees 140 daily crossings and handles 20 million barrels/day—now, traffic slows to a trickle as vessels are threatened.

• Attacks on Shipping and Facilities:

  • Multiple tankers attacked; at least one seafarer killed.
  • Iran’s Revolutionary Guard openly threatens, "If anyone tries to pass, Iran will, quote, set those ships ablaze." [06:08]
  • Insurers cancel or hike rates for coverage in the region, immobilizing most shipping.
  • 3,000+ vessels now stranded at Persian Gulf ports.

• Direct Attacks on Energy Infrastructure:

  • Qatar: Production of liquefied natural gas halted after drone attacks, causing European natural gas prices to surge 50%. Rebecca Fungi: "That had a very, very immediate effect." [07:19]
  • Saudi Arabia: Multiple attacks, including a drone strike on the Ras Tanura refinery, a keystone for Saudi and global oil exports. Production at key sites is halted.

• Status of Oil and Gas Production: As of the episode, neither Qatar nor Saudi Arabia have resumed full energy production, and a large portion of the international oil supply is effectively offline.

3. Global Oil Price Movements

[10:14 - 10:32]

• Price Tracking: Brent crude jumps from $73 to $81 per barrel, though not as sharply as some analysts had feared.

4. How Will This Affect Consumers?

[12:39 – 20:09]

A. U.S. Economy and Gas Prices

Guest: Harriet Tory

• Reduced Vulnerability: The U.S. is far less dependent on Middle Eastern oil compared to the 1970s, thanks to domestic fracking. Still, the U.S. operates within a global oil market, so price shocks are felt domestically.

  • Harriet Tory: “The US is technically energy independent, but at the same time, the price of oil is global. … When there are constraints on oil supply, it does have an impact.” [13:07]

• Transmission to the Pump:

  • It takes time for oil price jumps to translate into actual U.S. gas prices, but market sentiment can cause price changes more quickly.

B. Magnitude of Expected Price Rises

• U.S. Gas Prices: As of recording, average U.S. gas is $3.20, up 31 cents in a month, still well below the $5/gal peaked during the Ukraine war.

  • Harriet Tory: “People … only spend about 3% on gas. It’s actually a very small amount of your monthly spending across the board. But because it's such a visible part, people are just very aware of gas prices … and swings in gas prices do have an impact on the way that people feel…” [15:04]

• Broader Impact on Inflation: Gas prices impact the broader cost of goods and travel due to shipping and manufacturing dependencies.

  • Harriet Tory: “A $10 increase in the price of a barrel of crude oil will push up gasoline prices by 10 or 15 cents a gallon. … A 5% increase in oil prices will raise year over year inflation by about 0.1 percentage point.” [15:56]

• Ripple Effects: Increases in oil prices impact groceries (via transportation), airline tickets, and other consumer goods.

C. Worst-Case Scenarios and Silver Linings

• Big Risk: Continued volatility, with oil shooting over $100/barrel, would drive up inflation, make the Fed’s job harder, and could hurt the U.S. economy and labor market.

  • Harriet Tory: “…a big oil price shock and inflation could really hurt the US Economy and hurt consumers and hurt the labor market.” [17:04]

• Potential Upside: Higher prices can benefit U.S. energy companies (especially in Texas/New Mexico) who can sell their oil at a premium. Energy sector profits may rise, but little benefit accrues to average consumers.

D. U.S. Government Response & Global Political Backdrop

• Mitigation Plans: U.S. Secretary of State Marco Rubio says there’s a plan to counter soaring prices; specifics not provided.

• Presidential Response: President Trump notes higher prices may be “for a little while” and predicts a post-crisis drop, continuing to focus on affordability as a cornerstone issue.

  • President Trump (paraphrased by Jessica Mendoza): “If we have a little high oil prices for a little while, but as soon as this ends, those prices are going to drop, I believe lower than even before.” [18:56]

• Lingering Uncertainty: Economists and policymakers are unclear whether this will become a lasting cost shock or a short, sharp blip. The episode closes with caution about inflation’s stubbornness over recent years.

  • Harriet Tory: “It is a difficult situation because really nobody knows how this is going to play out.” [19:17]

Notable Quotes

• “Closing [the Strait of Hormuz], it’s like the doomsday scenario.” - Rebecca Fungi [01:01]
• "Iran will, quote, set those ships ablaze." - Iranian Revolutionary Guard official (as reported by Jessica Mendoza) [06:08]
• "Production … halted … we haven't got like messages saying that they restart. … It might take a while for them to come back to 100% production." - Rebecca Fungi [09:42]
• “The price of oil is global. ... When there are constraints on oil supply, it does have an impact.” - Harriet Tory [13:07]
• “A $10 increase in the price of a barrel of crude oil will push up gasoline prices by 10 or 15 cents a gallon.” - Harriet Tory [15:56]
• “A big oil price shock and inflation could really hurt the US Economy and hurt consumers and hurt the labor market.” - Harriet Tory [17:04]
• “If we have a little high oil prices for a little while, but as soon as this ends, those prices are going to drop, I believe lower than even before.” - President Trump [18:56]
• “It is a difficult situation because really nobody knows how this is going to play out.” - Harriet Tory [19:17]

Timestamps for Key Segments

• 00:05 – 01:22: Initial closure of Strait of Hormuz, immediate threats, and emotional reaction
• 04:10 – 08:37: Details on disrupted shipping, attacks on infrastructure, paralysis of region’s oil traffic
• 09:20 – 10:14: 3,000+ vessels stranded, status of regional production
• 12:42 – 15:48: Breakdown of how U.S. gas prices are affected, consumer spending habits
• 15:56 – 16:30: Gas price impact on broader goods and services, effect on inflation
• 17:01 – 17:45: Worst-case scenario for inflation and the economy
• 17:53 – 18:24: Who benefits from higher oil prices—U.S. energy producers
• 18:43 – End: U.S. and international political reaction, government mitigation, uncertainty about duration and depth of crisis

Summary & Takeaways

• The closure of the Strait of Hormuz has paralyzed a fifth of global oil supply, causing immediate price spikes and uncertainty.
• Direct attacks on key energy infrastructure in Qatar and Saudi Arabia have further strained supply, with recovery timelines unknown.
• While U.S. dependence on Middle Eastern oil has declined, Americans will still feel ripple effects through gas prices and inflation, especially if disruptions persist.
• Higher prices are a net negative for consumers but can boost profits for domestic energy producers.
• Global political leaders are scrambling to provide stability, though the situation remains volatile.
• The long-term trajectory for prices and economic impact is highly uncertain—much depends on how the conflict unfolds and how quickly the region’s energy infrastructure recovers.