The onset of the conflict in Iran raised the price of oil to levels not seen in years, causing the cost of gasoline to increase by an average of one dollar per gallon in the United States. This directly affects various sectors of the economy, especially transportation and agriculture, whose production chain depends on fuel oil.
In 2025, inflation measured by the personal consumption expenditures (PCE) index was 2.8%, while core inflation reached 3%. However, following the rise in oil and fertilizer prices, short-term inflation expectations began to increase, as reported by Michael Barr, a member of the Federal Reserve (Fed).
In the employment report released in March 2026, the United States created 178,000 new jobs, and the unemployment rate fell to 4.3%. Despite the strengthening labor market, the yield on the 10-year U.S. Treasury bond rose to 4.35% shortly after the data was published, reflecting investors’ concerns about persistent inflation.
The Federal Open Market Committee (FOMC) implemented cumulative cuts of 175 basis points in the benchmark interest rate over the past 18 months. Even so, the Fed faces a dilemma between maintaining inflation control, which remains above the 2% target, and avoiding a sharp slowdown in the labor market. The president of the New York Fed, John Williams, warned about these simultaneous risks caused by the supply shock generated by the Middle East conflict.
The closure of the Strait of Hormuz by Iran interrupted the passage of approximately one-third of the global fertilizer supply, which pressured agricultural input prices worldwide. In the first days of the crisis, two nitrogen fertilizers widely used in agriculture experienced price increases between 20% and 50%, strongly impacting producing states such as Texas, whose economy depends about 15% on the energy, transportation, and processing sectors.
The increase in costs for fuels and fertilizers affected the purchasing power of American households, especially those with lower incomes, according to Fed Vice Chairman Philip Jefferson. Furthermore, the budget proposed by the Trump administration for fiscal year 2027 requested approximately 1.5 trillion dollars for defense, an increase of about 40%, but cut 73 billion dollars from domestic programs, reflecting a reorientation of national priorities amid current tensions.
The impacts also reached the civil aviation sector. The General Aviation Manufacturers Association (GAMA) reported that in 2025, 4,308 civil units were shipped, generating total revenue of 35.7 billion dollars. Traditional companies in the sector, such as Textron Aviation, sold 639 units of the Cessna and Beechcraft lines, billing about 3.8 billion dollars. Meanwhile, Gulfstream delivered 158 jets that totaled more than 10 billion dollars in revenue.
Overall, the global aerospace industry was also impacted by fluctuations in energy and raw material costs. Embraer, for example, delivered 155 aircraft in 2025, generating revenue of 2.5 billion dollars, while Bombardier reported nearly 8 billion dollars in jet deliveries the same year. These figures indicate the sector’s resilience, even amid inflationary pressures and geopolitical uncertainties.
Besides the economic effects, tensions increased instability in financial markets. After statements by President Trump about possible additional military actions against Iran, Asian stock indices recorded declines, demonstrating investors’ sensitivity to news related to the region. Meanwhile, in the United States, monetary authorities continue to assess the balance between inflation, economic growth, and employment stability.
The conclusion of the process still depends on continuous monitoring by the Federal Reserve, which should analyze the impacts of geopolitical instability and the monetary policy response in the coming weeks. The expectation is that these assessments will guide future decisions on interest rates as the country faces simultaneous risks of rising prices and economic slowdown.
