Today, Explained - The price of the Iran war

Episode Date: March 10, 2026

Gas prices are spiking in the US. Markets are crashing. The whole world will pay for this war. This episode was produced by Kelli Wessinger and Avishay Artsy, edited by Amina Al-Sadi, fact-checked by Andrea Lopez-Cruzado, engineered by Patrick Boyd and David Tatasciore, and hosted by Noel King. Gas prices on Monday in Los Angeles. AP Photo/Damian Dovarganes. Listen to Today, Explained ad-free by becoming a Vox Member: vox.com/members. New Vox members get $20 off their membership right now. Transcript at ⁠vox.com/today-explained-podcast.⁠ Learn more about your ad choices. Visit podcastchoices.com/adchoices

You know, they've said this about a lot of things. No other president could do some of this shit I'm doing. That's probably true. President Trump continues to give mixed messages about the war in Iran. Mr. President, you've said the war is, quote, very complete, but your defense secretary says this is just the beginning. So which is it? And how long should Americans be prepared?

Well, I think it could say it both. More clear is what's happening to the U.S. and global economies as a result of this conflict. Markets falling like Liberation Day, the sequel. Oil prices up like we haven't seen any. years, that means gas prices up, that means other prices will go up. Trump's supposed to be focusing on affordability. His party has a midterm election to try to win. He talked to Republican lawmakers yesterday.

So our message is simple. Democrats created the high prices, and our policies are totally ending them. And they're ended and we're doing better. We're even bringing them down further. Self-evidently untrue. Will the economic fallout of the war in Iran catch up with Trump? We're going to ask on Today Explained. Support for the program today comes from Atio, the AI CRM for modern teams.

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Is the war in Iran already affecting the U.S. economy? Yes, is the short answer. Okay. Oil prices move very quickly to account for future conditions and current conditions, and that is fed almost immediately into gas prices. Americans are feeling the pain at the pump. The widening war is rattling investors around the world. Sitting oil prices soaring. The price of crude oil has risen above $100 a barrel as the strait of Hormuz is effectively closed and Iranian fuel depots are battered.

So if you own a car, if you've been to fill it up recently, you will have noticed it was more expensive than the last time. people who spend money on gas have less money to spend on other things. That also feeds into all manner of other things that we can go into all sorts of energy costs, but the most visible immediate term impact is at the petrol pump on gas prices. Why don't we go into all manner of other things while we're here? Absolutely. So energy is an input good. The amount of energy you consume is mostly not in the form of gasoline. It's embodied in products and all sorts of things that you purchase, even things that you wouldn't consider as being energy intensive.

You know, agricultural goods require fertilizer. They require tractors. They require all sorts of things. Everything that's manufactured is made somewhere and uses some amount of energy. The past couple of years in farming have been very thin on margins. And this is another year where farmers are looking to cut costs anywhere. A lot of guys have just said, I'm done. We're going to quit. They're hanging it up. There's sales everywhere.

Lots and lots of farm sales. Financially, it's causing a lot of mental health problems as well. So that the feed-through from energy prices really hits every consumer item, every intermediate item, every machine, anything manufactured, almost anything you can buy, other than sort of some high-end professional services where someone might be doing that for you with relatively the energy put in. Almost everything is affected by energy. How long does it take? Like, if I were to go to the grocery store today, which I really should do, am I going to find that, you know, eggs and vegetables are more expensive? You probably wouldn't find that immediately, if only because a lot of the

supply chain activity around what you see in the store today will have begun before the attacks on Iran began. These things feed through with a sort of long and variable lag time. Some things will be appreciating relatively soon in the store. And some things, you know, it might take months and months, maybe even more than a year to feed through. If you imagine something like fertilizer costs, which are very, very closely pegged to the price of oil, those fertilizer costs affect the amount of food produced

in various parts of the world. You won't start to see those lower amounts of food produced for quite a long time, and the price effects won't be seen for quite a long time. So it's going to vary depending on the item. What about the markets? The markets, fair to say, are kind of always whipsawing. I'm old enough to remember Liberation Day.

You don't have to pay too much, as I understand it, you'll pay nothing. It's a lot of work, a lot of work for something, actually. Little under a year ago. And we all said, this is the end of the world and the Dow crashed and everything crashed. And today, you know, you wake up. We're speaking on Monday, I should note, and you see sort of the same kinds of warnings. But the markets always go back up, right? Markets tend to, in the long term, go back up. It's just whether you can see it through to the long term. There are not many extended, say, say, 10-year periods in American equity market history where you weren't looking at positive returns afterwards. There are a couple, most of them quite a long time ago. At the moment, there's been a lot going on in markets already this year. There's been a lot of worry about AI and technology companies and how things will be affected and private credit and borrowing at the slightly less credit worthy end of business borrowing in the U.S.

So the S&P, you know, a broad index of stocks, been very volatile. More or less, at the time of speaking, hasn't really gone anywhere this year. Stocks are down across the board. It is an historic day in the market. Good for people who have their retirement. in the stock market. Wall Street's main indexes tumbled on Friday. Stocks end the day higher.

The stock market plunging. There's been a lot of ups. There's been a lot of downs. I would say it's been generally down the past few days because of all of this volatility. I think there's just a lot of uncertainty as to how long all of this lasts as much as there is uncertainty over exactly what form the pressure on the oil market takes. The bigger question is just, is this something that's going to be over by the end of the week and there's going to be a sort of an embarrassing withdrawal and a walkback.

So we're winning very decisively. We're way ahead of schedule. Or is it something that we're going to be talking about in six months' time? If it starts up again, they'll be hit even harder. And your guess is as good as anyone else's on this matter. What would a – let's say it does drag on beyond the week, beyond the month even. What about other economic indicators, things like inflation, and growth. What do you envision happening? Absolutely. Well, for the same reason that the energy prices

inform prices all across the economy, you would expect this to be inflationary. It doesn't mean it's going to be an absolutely explosive impact. What you are going to get in the U.S. is you're going to get oil producers moving to drill and produce more precisely because this is a sort of signal they look at. Oil hits certain amounts. It tips over for certain business models and they say, okay, yep, let's get drilling on that slightly more marginal patch or whatever. So you're going to see some sort of pressure coming back in the other direction. But ultimately, higher oil prices, all prices are one of the major inputs into consumer prices and they inform everything else. All right. Now we should talk about President Trump, I think, because you may recall that in the

2024 election, when voters were asked why they were voting for President Trump, there were two big issues, right? Immigration was one and the economy was the other. Americans were. very, very, very angry about inflation, which in layman's terms, higher prices. And here we have one of the president's actions leading directly to higher prices. What do we hear him saying about his war with Iran and his affordability agenda? Well, there's been a lot of, so we say, muddled communication from the White House over the past few days when it comes to oil prices. It affects other countries much more than it does the United States. It doesn't really affect us.

We have so much oil. We have tremendous oil and gas much more than we need. The president has asked investors and the American public in general to sort of look through these what he calls short-term effects. We're putting an end to all of this threat once and for all, and the result will be lower oil prices, oil and gas prices for American families. We've done that. We've done it. We brought it very low. I think one thing we did see with the tariffs last year, and that is a big matter for debate among investors and traders and analysts, is there is this idea that the market is a disciplining factor on the president, on the White House, that basically he doesn't like seeing the red line go down and that there is only so much of the sort of negative press that he's willing to put up with, whether that transpires to be true.

and most importantly, how much of it you need to see before it transpires to be true is not clear at all. Last year, it allowed for the reduction of tariffs. The tariffs didn't go away, obviously. You know, the tariffs still really largely in place by various means. So what that means for something as complicated as this, because it's a military endeavor, is very, very unclear. I want to ask you about something Trump said. It was about a week ago, but it was a really interesting moment. He was in the Oval, and he was asked if he was worried about higher oil prices.

I'll tell you what, I have never had more compliments on something I did. People felt it's something that had to be done. So if we had a little high oil prices for a little while, but as soon as this ends, those prices are going to drop. Okay, so a little mangled there. But what the president is saying is when it's over, oil prices will immediately go back to normal. What does that depend on? Let's say we want to envision a world where we can get oil prices back down to where they were three weeks ago. What has to happen?

That's a great question. So I think it would necessitate an immediate decision by U.S. and Israeli forces that they no longer wish to Peshida's campaign, which the Iranian government would essentially have to agree to. you would also now need several Gulf countries that have become involved in this to say we're not involved anymore, right? You can imagine a circumstance whether the U.S. withdraws or halts airstrikes, but strikes between Gulf countries and Iran continue, which would be really difficult for getting oil out. If you notice they did something which was very foolish, very stupid, I would say. They attacked their neighbors, and their neighbors were largely neutral. or at least weren't going to be involved, and they got attacked. The main question in terms of how quickly things go back to normal is how long this goes on in the first place.

The longer it goes on, the more difficult it becomes to get this production all going again. You can't just switch it on and off overnight. You don't have all the workers required sat there ready to go. There is not just a, yeah, not just simple on-off switch. The longer the disruption lasts, the more the shipping is out of place, the more all of the elements of production are in the wrong place at the time this gets turned back on. So if it does drag into weeks and months, I think it's not a linear process. It can get worse and worse depending on how long it lasts. How do we see the president's critics seizing on his sort of inability

to acknowledge or his refusal to acknowledge that he has not provided an end in sight at this point. Absolutely. Well, I think from a sort of affordability perspective, this is now the second major supply shock economically caused sort of directly by actions. The administration's taken, you know, so I think in terms of the president's opponents and critics, the most important thing to start thinking about is how much this affects the midterm elections. The one thing the American people are clear about is that they do not want the United States dragged into another long-term war in the Middle East. Throughout his 2024 campaign, he insisted that he was the pro-peace president. On election night, he even declared, I'm not going to start a war. I'm going to stop wars.

And I think if you see people paying, you know, significantly more for gas, seeing prices rise across the economy as they have for the past few years, that is going to be pretty much. bad for the Republicans electorally. It's going to be a really, really hard sell. That was the economist Mike Byrd. Coming up, they won't let me call it World War III, but the whole world is paying for this war. Support for today explained comes from CHIME. It's easy to feel overwhelmed by choosing the right banking app. Chime says they're more than that. They want to make banking accessible for everyday people by eliminating overdraft fees, minimum balance requirements, and monthly fees. They also say they can help your everyday spending go further, offering real rewards and a clearer path toward financial progress. That means things like helping you build your credit history, plus you can

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I'm the editor of Semaphore Gulf, and I'm usually based in Dubai. I left a few days ago, and I'm in Istanbul now on my way back to the U.S. State Department issued a recommendation for U.S. citizens to evacuate, and I was able to get a flight out and decided to take my family out. Good. I'm glad to hear that. Glad you're safe. All right. So the Gulf states are, of course, part of the global economy. Let's talk first about what this war has meant for their economies in the Gulf. Yeah. So the Gulf has been sitting on a massive pool of, of oil and natural gas and has been able to use that to become an integral part of the global

economy. It produces more than the third of the world's oil and gas, and it's become a logistics, tourism, and trade hub for Africa, for South Asia, and into Europe. Now, what has happened to them with the war is it really has severed many of these links and networks that has built up over years, and it's created both an economic constraint on them and really, really, almost a catastrophe when it comes to its ability to export this energy, as well as the far more dire effects of being subject to Iranian ballistic missiles, cruise missiles, and drone strikes on their infrastructure. Tell me about the exporting catastrophe. What does catastrophe mean here, exactly?

Because about a third of the world's traded oil passes through a narrow strait between the edge of the UAE and Iran. called the Strait of Hormones, which everybody is now talking about. Now, that has been effectively shut, and that means that some oil supply has been shut in, and actually a very large amount. So when they can't get the oil out and energy and condensate and other products, this means that, you know, they're losing a lot of revenue every day. And at the same time, they're also spending a lot of money to fight this in wages war. All right. So we know in the United States that oil prices, gas prices at the pump, are going

So we are seeing it firsthand. But it's not just in the United States, right? Oil from the Gulf goes all over the world. Tell me about the other ripple effects here. Yeah. So actually, the U.S. imports very little oil from the Gulf. But the rest of the world, China, Japan, South Korea, large parts of Europe, India, Pakistan, they need this oil. This allows them to do everything, right?

To run their factories, to run their power plants and become the industrial. industrial and manufacturing power hubs that many of these countries are today. So they have a crucial interest in that. And then it just feeds through the global economy. It's a global commodity. It rises somewhere or there's a crunch somewhere. It goes up everywhere. What else is produced in the Gulf that we're seeing held up at this point?

The big one, and this one that maybe doesn't get as much attention, is liquidified natural gas. Qatar is one of the biggest producers of liquidified natural gas in the world. It's what made Qatar wealthy. In the 90s, they took this bet, went out and developed an offshore field and built up, they're called the liquefaction plants. They have 14 trains, and they produce 77 million tons of LNG per year. Most of that LNG goes to East Asia and to Europe, and now Qatari's have stopped producing it completely because, as far as the Qatari say, and we've seen evidence of that. One of their plants was hit by an Iranian drone. and these are very complex and sensitive production lines.

You can imagine gas is being pumped through and then it's chilled down and any type of spark around there would just blow everything up. So they really had to shut it down for safety reasons. And the other factor is you can't really store it anywhere. So you can load it onto ships

but then the ships become these floating bombs. So they just shut down production completely. Generally speaking, there are supplies right now but we will start to see the perhaps rationing of power and so on. But the other commodities, I don't know how much you think about helium and fertilizer and all that stuff, it also comes from this region. Ah, okay. So at a certain point, farmers start feeling this, yeah?

Correct. Farmers, tech companies, right? Helium is not only used to make balloons, you know, rise and float and to make your voice sound funny. Helium is also used in precision manufacturing to create semiconductors and MRI machines. So helium is this crucial component. It's a byproduct of natural gas production. And Qatar is one of the bigger producers in the world, if not the biggest. Wow. Wow.

When and how did the Gulf region become so central to the global economy? Since oil was found, obviously Saudi Arabia became a crucial source of supply during World War II. Oil, one of the materials that is making a truly great contribution to our modern civilization. And then the other Gulf states, the UAE, Qatar, Oman, Kuwait, they also found oil, and they started producing it at ever-increasing quantities. The populations themselves, the people who were living there, there wasn't enough demand for domestic development because there were such small populations.

So they built up their economies to serve. them, but there was surplus, massive amounts of money that was surplus. And what were they to do with this money? A lot of it was recycled through U.S. assets, Western assets, and then they became larger and larger. Right now, Gulf sovereign wealth funds control maybe four, four and a half trillion dollars of wealth. That is projected to increase to about seven trillion dollars in the next four or five years. You know, that's serious money. Other industries are now bigger, even than oil, which is always going to be a big monster. It's a big one. And the other parts of the economy that they've developed next to it,

there's a high-precision aluminum manufacturing because that requires energy. They bought a lot of planes, if you've ever traveled to this region, you know about the airlines, Emirates, Etihad and Qatar Airways. This is Qatar Airways, the world's best for a record ninth time. Trade links, so they built ports, and then once their ports became efficient in the Gulf, these were great routes to bring in products from Asia, to Europe and beyond to Africa.

Then those port companies went out and bought ports in Africa. They built up their warehousing. They became central nodes of logistic hubs throughout the world. These are industries that are crucial to global trade. We know that businesses and investors really hate instability, and nothing gives instability like an outright war. Is the rest of the world looking around and thinking, the Gulf is no longer reliable?

The Gulf is no longer safe. We got to find other options. If you want to be close to a well-organized, efficiently run economies with access to incredible amounts of energy, if you're an AI company and you need to build data centers, you will look at the Gulf. You will look at this instability and consider ways to mitigate it. Are there ways to protect an AI data center or other types of investments that you're making? But absolutely, if you don't have to be there and you're concerned about risks, this could be. the time where you start to reconsider and you start to slow down investments and you maybe diversify a bit and go somewhere else where there's fewer drones or fewer missiles hitting.

All right. So we talk about the global economy because it is global. And we're seeing this week, wild swings in the market, wild swings in oil prices. All of those things, as I understand it, could end up being temporary if this thing is ended soon. What do you think the long-term effects, if any, might be here. I think this is actually not going to end soon. I think the question of it ending soon is, you know, the G is out of the bag, right? Is that the right term? I could be wrong.

Yeah. It could be a bottle. The genie's out of the bottle. The cat's out of the bag. The genie's out of the bottle. Once you threatened the choke point of Hormuz, once you've sent missiles out, either there has to be a complete defangging of Iran, which is what the U.S., many Trump administration have been talking about and Israel as well,

because that threat persists, unless there's a dramatic change in how Iran wants to operate, because at any point, they could just shoot out a couple of drones and it would bring everything back to a standstill again. So that risk premium, I think, is going to remain for both commodity prices and also for the threat or the potential for doing more business. in the Gulf. And that's something that it will take time maybe for people

to forget, but I think it's going to be very hard, especially with how much we see of these things now, right? So we see on social media the strikes, people talk about it. It can't be buried. Muhammad Sergi is the editor of Semaphore Gulf.

Kelly Wessinger and Avashai Artsy produced today's show. Amina El-Sadi edited, Patrick Boyden, David Tatashore, engineered, and Andrea Lopez-Crisato check the facts. I'm Noel King. It's today, point.