The ongoing conflict in Iran is reverberating across global markets, with impacts reaching into the daily lives of Americans. Beyond the already climbing gas prices, which have hit an average of $4 per gallon in the United States, other essential products like medicine, plastics, and even groceries may see significant price increases. The crux of the economic turmoil lies in the disruption of supply chains stemming from the potential closure of the Strait of Hormuz, a critical passageway for global trade.

The critical role of the Strait of Hormuz

The Strait of Hormuz, located between the Persian Gulf and the Gulf of Oman, is one of the most strategic chokepoints for global shipping. Approximately a third of the world’s liquefied natural gas (LNG) and 20% of its crude oil pass through this waterway. Disruptions in this region, caused by the Iran war, are causing ripple effects across various industries that depend on these essential resources. Without smooth operations through the strait, the global economy faces compounding costs in both raw materials and finished goods.

Impact on fertilizers and food prices

One of the most immediate concerns stemming from this disruption is its effect on agriculture. Fertilizer prices have already surged in the U.S. due to supply chain disruptions, particularly for urea, a nitrogen-rich fertilizer essential for corn crops. Farmers are feeling this impact directly. For instance, a farmer who purchased fertilizer in January for $350 per ton is now seeing prices spike to $650 per ton.

This sharp increase comes during a critical time for American farmers who are preparing for spring planting. Fertilizer costs directly influence how much farmers can plant, which will ultimately affect harvest yields in the fall. This chain reaction could lead to higher food prices within three to six months, impacting everyday grocery items.

Plastics and packaging

The production of polyethylene—a widely used plastic essential for packaging, construction, and automobile manufacturing—is also at risk. The Middle East accounts for 15% of global polyethylene production, with 84% of its exports passing through the Strait of Hormuz. A prolonged disruption could drive up costs for packaging companies, which will likely pass these costs along to product manufacturers and, eventually, to consumers. Everyday goods that rely on plastic packaging could see price hikes, from bottled beverages to household essentials.

Helium shortages and technology impacts

The Iran conflict is also threatening helium supplies, critical for medical and industrial applications. Qatar, which produces about one-third of the global helium supply, relies heavily on the Strait of Hormuz for export. Helium is essential for operating MRI machines and manufacturing semiconductors. As LNG facilities in Qatar have faced attacks, helium prices have surged. The semiconductor industry, in particular, may experience disruptions, leading to higher prices for electronics, automotive components, and other tech-reliant products.

Aluminum prices soar

Aluminum, a key material used in products ranging from laptops to soda cans, has been heavily affected by the conflict. The U.S. imports about 90% of its aluminum, with roughly 20% coming from Gulf nations. Early in the conflict, aluminum futures on the London Metal Exchange hit a four-year high. Such price spikes in aluminum will likely increase costs across industries, including consumer electronics, automotive manufacturing, and beverage packaging.

Pharmaceutical challenges

The pharmaceutical industry is another sector being squeezed by the disruptions. India, which supplies around 50% of generic drugs consumed in the U.S., relies on crude oil imports through the Strait of Hormuz and imports raw ingredients via the Gulf. If the conflict drags on, shipping costs for critical drug components could rise, potentially causing shortages and price spikes for generic medications.

While pharmaceutical companies typically maintain buffer stocks lasting 30 to 60 days, prolonged disruptions could deplete these reserves before supply chains recover. In this scenario, consumers may face higher prices for medications, particularly generics that are essential for treating chronic illnesses.

Broader economic and political implications

The economic fallout extends beyond just material shortages and price spikes. The rising costs of everyday essentials threaten to influence the political landscape, particularly with the 2026 midterm elections approaching. Inflation tied to the Iran conflict may strain the efforts of incumbent Republicans, including President Donald Trump, to appeal to voters concerned about affordability.

Meanwhile, Democrats are positioning the ongoing economic issues as a liability for the Republican administration, aiming to persuade voters that the current struggles are tied to policy decisions. The outcome of the midterms could hinge significantly on how quickly the conflict is resolved and how well supply chains recover.

What a resolution could mean

If the conflict were to end immediately, the economic recovery wouldn’t be instantaneous. Supply chains take time to stabilize, meaning that the effects of the disruption would still linger for at least one to two months. Price increases in critical categories such as food, medicines, and consumer goods are likely to persist during that adjustment period.

For now, consumers and businesses alike are bracing for ongoing turbulence. Whether it’s higher gas prices, surging costs for essential groceries, or escalating bills for healthcare and electronics, the economic ripple effects from the Iran war are unlikely to dissipate any time soon.

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FAQ

Why are food prices affected by the Iran conflict? The conflict is disrupting fertilizer supplies, particularly urea-based fertilizers essential for farming. Higher fertilizer costs reduce crop yields, leading to potential price hikes for groceries.

How does the Strait of Hormuz impact plastics? The strait is a critical route for transporting polyethylene, a commonly used plastic. Disruptions increase production costs, which manufacturers pass down to consumers.

Will electronics become more expensive? Yes, disruptions to helium and aluminum supplies, crucial for semiconductors and electronics, are expected to increase production costs, affecting prices for items like laptops and cars.

How long will these price increases last? Even if the Iran conflict ends soon, supply chains will take 30-45 days to stabilize. Price spikes may persist for a month or more following resolution.

Are generic medications at risk? Yes, India’s pharmaceutical industry, heavily reliant on the Strait of Hormuz for raw materials, is facing higher shipping costs. Prolonged disruptions could result in higher prices or shortages of generic drugs.