How Will The Iran Conflict Affect US Retail?

The Iran conflict could disrupt supply chains, drive up energy and freight costs, and weaken consumer demand depending on its duration and severity.

Commercial ship traffic through the Strait of Hormuz — where about a fifth of the world’s oil supply typically travels, and a key route for commodities like aluminum, sugar, and fertilizer — remains at a near standstill amid ongoing strikes by the U.S. and Israel, coupled with threats from Iran to fire on tankers.

Typically, about 138 vessels travel through the Strait of Hormuz every 24 hours — but that has dropped to “single-digit levels” in recent days as some vessel operators and insurance companies suspend operations, according to a March 5 statement from the Joint Maritime Information Center.

Some shipping companies are rerouting vessels around the Cape of Good Hope in Africa and adding surcharges to compensate for additional risks, also factoring in the extra fuel and labor for a longer journey.

The outbreak of the Iran war adds a new layer of stress to global supply chains already strained by the rise of tariffs and other trade barriers. The instability is seen reducing the prospects of container shipping returning to the Red Sea and Suez Canal routings following a pullback in attacks on ships by Yemen’s Houthi rebels.

US-Iran Conflict Could See Shipping Congestion Affect American Ports, Retail Pricing

Although nearby regions in Europe and Asia are most directly impacted, the shipping congestion is expected to eventually unsettle U.S. ports.

“The supply chain is kind of like a long train with many cars and each car represents, let’s say, a port in the world. Well, if one car gets derailed, it can very often have a domino effect to many other cars behind it or in front of it,” Michael Goldman, general manager North America of CARU Containers, told the Associated Press. “So although we only have a small number of ports affected by this military action, it can really have a big effect on the total supply chain.”

Disrupted energy supplies to Europe and Asia likely mean higher prices for Americans as the global price of oil and natural gas rises.

Gasoline prices in the U.S. reached $3.32 on Friday, increasing 34 cents, or about 11%, over the past week — the highest price since September 2024. Market watchers see continued volatility ahead that could dampen broader spending.

“[Higher gas prices are] particularly hard on lower-income households that spend a higher share of the budget on gas,” Mark Zandi, chief economist at Moody’s, told CNBC. “That’s the group that’s already under a lot of financial pressure.”

Further, Zandi said, “Higher gasoline prices have an outsized impact because it hurts consumer sentiment. That affects their ability and willingness to spend, and that weighs on the economy.”

A full 70% of consumers say gas prices affect their feelings about the economy, according to the National Association of Convenience stores. Along with ongoing tariff pressures, any related higher shipping costs, delayed cargo, and elevated insurance premiums are expected to add inflationary pressures for food, chemicals, electronics, and other imports should the conflict drag on.