A Radford University professor is analyzing the United States’ current involvement in Iran and what it could mean for the economy as issues like energy prices, particularly crude oil, continue to grow. More from WFIR’s Conner Arthur:
Military strikes by U.S. and Israeli forces against Iran are pushing crude oil prices toward $80 per barrel and threatening global trade routes. Dr. Thomas Duncan, a professor of economics at Radford University, warns that the conflict is already hitting energy markets and disrupting shipping through the Strait of Hormuz. These disruptions act like a tariff by adding significant transportation costs to goods moved around the region.
Costs at the Pump and Beyond
American consumers are seeing immediate effects at gas stations as crude oil prices climb between $75 and $80 per barrel. However, the economic impact extends to various products. Duncan notes that while gas prices react quickly, other oil-based goods like industrial plastics might see price hikes later. The Strait of Hormuz carries roughly one-fifth of the world’s oil supply, making any blockage a significant threat to global stability.
Shipping Risks and Federal Intervention
The federal government is weighing options to protect commercial vessels. President Trump indicated that the U.S. Navy could escort ships, and federal spending might cover rising insurance costs. Duncan questions the sustainability of this approach, asking how long the U.S. will pay these expenses if the conflict continues for months. Currently, traffic through the main route has stagnated as companies avoid the heightened risk.
The Threat of Unclear Objectives
The death of Iranian leader Ali Khamenei introduces the possibility of internal conflict and regional instability. Duncan points to a historical pattern of “mission creep,” where targeted strikes evolve into expensive nation-building efforts. He compares the situation to previous involvements in Iraq and Afghanistan, where initial goals expanded into long-term commitments.
If the U.S. deploys and stations troops within Iran, Duncan says the economic and physical costs would shift into a different category entirely. Investors remain cautious, as the lack of a clear exit strategy creates massive uncertainty for the global economy.
