Market Update: As Oil Prices Rise, the War With Iran Becomes a Worldwide Economic Hazard – Full Analysis

Fuel prices could soar, and stay elevated for months. That could make groceries and other shipped goods more expensive. And consumers and businesses, stung by the rising costs, could choose to spend less, constraining economic growth.

In the eyes of economists, that is the increasingly real and dire picture from the U.S.-led war with Iran, now in its second week. It may be a conflict of President Trump’s making, but it is becoming the world’s latest economic headache, one that has sent foreign leaders scrambling for ways to contain the possible fallout.

At the heart of the panic was a surge in the price of oil, which at one point on Monday shot above $100 a barrel. Because energy is central to the functioning of the global economy, the turbulence prompted heightened fears about a prolonged conflict that could exact a deep financial toll around the world, including on Americans.

In response, world leaders convened an emergency meeting on Monday of the Group of 7 countries, where finance ministers considered, yet decided against, tapping their national stores of oil to increase available supply. It was only after Mr. Trump asserted later in the day that the war was nearing its conclusion that oil prices began to calm down again, falling to around $85 a barrel.

“I knew oil prices would go up if I did this,” Mr. Trump told a news conference in Florida. “They’ve gone up probably less than I thought they’d go up.”