Why the Conflict With Iran Could Soon Hit Wallets in Virginia

The war between the United States, Israel, and Iran is unfolding thousands of miles away, but its consequences could reach directly into the finances of Virginia households.

The reason is simple: global oil markets depend heavily on the Strait of Hormuz.

Three basic realities explain why this conflict could raise prices and threaten the broader economy:

• Oil prices are likely to stay elevated until the Strait of Hormuz fully reopens.

• The longer the disruption continues, the higher fuel costs could climb.

• Extended turmoil in energy markets could eventually slow economic growth and affect jobs.

The Strait of Hormuz 

For energy markets, the central issue is whether oil can move safely through the Strait of Hormuz.

The narrow passage between the Persian Gulf and the Gulf of Oman carries roughly 20 percent of the world’s oil supply, making it one of the most important shipping routes on Earth.

U.S. Energy Secretary Chris Wright said it may take several weeks before the U.S. Navy can begin escorting tankers safely through the area, and admitted there are no guarantees prices will drop anytime soon.

Even if hostilities stopped immediately, experts say restoring normal operations could take time.

Why the Length of the Conflict Matters

If the strait remains closed or partially blocked, energy prices could continue climbing.

Some analysts warn oil could reach $150 per barrel if shipping disruptions persist.

Higher oil prices quickly translate into higher costs for consumers.

Gas prices in Virginia are already up 68 cents per gallon in the past month, increasing the cost of everyday travel, especially for people with long commutes.

Diesel fuel, which powers trucks and heavy transportation, is approaching $5 per gallon. That matters because nearly every product we buy is moved at some point by truck, ship, or airplane.

Shipping companies often respond by adding fuel surcharges when diesel costs rise. Some carriers, including FedEx, have already begun implementing them.

Businesses are unlikely to absorb those increases. Many businesses in Virginia have already been dealing with higher costs tied to tariffs, and analysts expect most additional expenses to be passed on to consumers.

The first products to become more expensive are typically those that require rapid transportation, such as dairy products, produce, seafood, and other perishables. Airline tickets may also rise as jet fuel prices climb.

Over time, sustained increases in transportation costs can push up prices across a wide range of goods.

Economic Risks Are Growing

The broader concern is what prolonged high energy prices could mean for the economy.

Historically, large oil price spikes have often coincided with economic slowdowns. Major examples include the 1973 oil crisis, the 1990 Gulf War oil shock, and the energy-driven inflation that preceded the 2008 financial crisis.

Higher fuel costs can ripple through the economy by increasing business expenses, reducing consumer spending, and unsettling financial markets.

Today, businesses are already navigating uncertainty related to tariffs, supply chains, and the growing impact of artificial intelligence on employment.

Economists are increasingly warning that a sustained energy shock could push the economy closer to recession. This is especially troublesome in Virginia, where we're already experiencing an economic slowdown.

This week, analysts at Goldman Sachs raised their forecasts for both inflation and unemployment and increased their estimated probability of a recession this year to 25 percent, up from 20 percent.

For now, the path forward depends largely on one thing: whether shipping through the Strait of Hormuz can be restored.

Until then, the global oil market—and consumer prices—remain on edge.