In just 10 days, the conflict between the US–Israel alliance and Iran has already caused significant consequences for the global economy. Fuel prices surged only days after the conflict began, reaching levels comparable to the oil crisis in mid-2022.

Iran has recently warned that oil prices could rise to $200 per barrel if the United States and its ally Israel choose to “continue this game.”

So the key question is: could the conflict between the US and Iran drag on for an extended period?

Key Takeaways

• The US–Iran conflict shows signs of lasting longer as Iran appears to adopt a strategy of prolonged confrontation.
• Disruptions around the Strait of Hormuz are pushing oil prices sharply higher.
• Global inflation could worsen if energy supply becomes increasingly constrained.
• Oil may become one of the most volatile assets in the coming period.
• Expectations for Federal Reserve rate cuts in 2026 could be delayed.

1. Will the US–Iran Conflict Last Longer?

On March 1, 2026, immediately after the first day of the US and Israel launching attacks on Iran, tensions began escalating rapidly. As of March 10, the latest developments suggest that Iran has managed to hold its ground and the conflict is lasting longer than initially expected.

The United States has confirmed that at least six soldiers have died, and President Donald Trump admitted that the number could rise further. If the conflict does not end soon, oil prices may continue to surge, inflation may worsen, and global markets could face greater instability.

Early on March 9, Iran’s Assembly of Experts, the body responsible for selecting the Supreme Leader, officially appointed Mojtaba Khamenei, the 56-year-old eldest son of the late Ali Khamenei, as the third Supreme Leader of the Islamic Republic of Iran.

Like his father, Mojtaba has taken a hardline stance, declaring readiness to cause “great catastrophe” for the United States and Israel while refusing to surrender. On the same day, the Islamic Revolutionary Guard Corps and the Iranian armed forces pledged loyalty to the new leader, reinforcing the position of conservative factions during a time of military crisis.

Before Mojtaba’s appointment, President Trump had stated that any Iranian leadership would “need US approval,” while also calling on the Iranian people to rise up and “take back their country.”

After Iran announced Mojtaba’s appointment, Trump rejected the legitimacy of the decision. Iran interpreted the US demand to intervene in the succession process as a direct violation of sovereignty, increasing tensions and reducing the likelihood of near-term negotiations.

Combined with the IRGC’s declaration that Iran could sustain high-intensity warfare for at least six months, the Middle Eastern country appears prepared to extend the conflict. This scenario may work against Trump’s political calculations while simultaneously creating significant economic consequences globally.

2. Inflation Could Become Worse

Only ten days after the conflict began, the economic consequences are already evident, particularly through sharply rising fuel prices. There are three main reasons :

• Strait of Hormuz disruption : The Strait of Hormuz is one of the most critical maritime routes in the world, responsible for transporting more than 20 percent of global oil supply. If Iran blocks this vital passage, oil shipments are disrupted or costs increase significantly.
• Gulf producers forced to reduce output: Oil and gas storage facilities across the Gulf region are filling rapidly as tankers struggle to leave ports. As a result, oil fields in Iraq and Kuwait have been forced to reduce production, and the United Arab Emirates may soon follow.Shipping and insurance costs have doubled, and many shipping companies are refusing to travel through the increasingly dangerous Hormuz region.
• No immediate policy response : President Trump recently dismissed the possibility of releasing oil from the Strategic Petroleum Reserve in the short term and stated that higher oil prices are “a very small price” to pay for global security.

As a result, Brent crude oil surpassed $119 per barrel for the first time since Russia launched its military operation in Ukraine in 2022. Average gasoline prices in the United States have risen 16 percent within a single week to $3.45 per gallon.

On the MEXC exchange, oil-related derivatives trading pairs USOIL and UKOIL also reached record levels of 118.2 USDT and 135 USDT respectively. Prices briefly fell afterward following Trump’s statement on Truth Social claiming the conflict would end soon.

In the stock market, negative sentiment has spread as higher fuel costs weigh on global equities. Japan’s Nikkei 225 dropped more than 7 percent, South Korea’s KOSPI fell 8 percent and triggered circuit breakers, while S&P 500 futures declined 1.7 percent and Nasdaq lost 1.9 percent.

According to estimates from the International Monetary Fund, every 10 percent increase in oil prices adds around 0.4 percent to inflation and reduces global GDP growth by 0.15 percent. With oil already up roughly 30 percent, that implies approximately +1.2 percent inflation and −0.45 percent global GDP growth.

Kpler oil analyst Homayoun Falakshahi believes crude prices could reach $150 per barrel by the end of March if the Strait of Hormuz remains closed.

Meanwhile, Qatar’s energy minister has publicly warned that producers across the region may soon be forced to completely halt production if the current situation continues.

3. The Federal Reserve May Pause Rate Cuts

Before the conflict began, the Federal Reserve was already in a wait-and-see stance. The central bank held interest rates steady in January 2026 after three consecutive rate cuts since July 2025.

At that time, the outlook was relatively clear. If the labor market weakened further, the Fed could consider one or two rate cuts in the second half of 2026.

However, the current oil price shock may push those expectations further away.

Although US unemployment rose to 4.4 percent in February, according to data released on March 7, rising inflation above the Fed’s 2 percent target could complicate the decision to cut rates. In extreme cases, the Fed may even need to consider tightening policy again if inflation becomes uncontrolled.

There are now eight days remaining until the next interest rate decision. According to the FedWatch tool, 97 percent of market participants expect rates to remain unchanged at 3.5 percent to 3.75 percent.

4. Key Developments to Watch

As discussed earlier, prolonging the conflict could be Iran’s most practical strategy since it would complicate President Trump’s political plans.

Negotiation leverage against China : If the United States can quickly control the situation with Iran, Trump would gain an advantage ahead of negotiations with Chinese President Xi Jinping scheduled between March 31 and April 2, 2026. China remains Iran’s largest oil buyer.

US midterm elections in November 2026: If the conflict ends quickly with a US victory, Trump could gain a strong political advantage for the Republican Party by presenting the administration as eliminating Iran’s nuclear threat and securing the Strait of Hormuz.

Control over oil supply would also make it easier for Trump to implement domestic policies beneficial to the United States.

In reality, Trump wants the war to end quickly but with a clear US victory.

However, Iran’s strategy appears focused on prolonging the conflict and increasing pressure on global energy supply chains. As a result, tensions may continue escalating in the coming weeks.

Whenever instability increases in the Middle East, markets react quickly to potential supply disruptions, especially around the Strait of Hormuz which handles around 20 percent of global oil flows.

This raises the probability that oil prices will continue trending higher or become significantly more volatile as investors begin pricing in a “war risk premium.”

Historically, each escalation of tensions in the Middle East has made oil one of the most reactive assets in global markets.

For that reason, besides monitoring geopolitical developments, oil trading may become an interesting opportunity as price volatility increases.

Major exchanges such as MEXC have already listed trading pairs for traditional assets like gold, silver, and oil. The platform is also offering zero trading fees for oil pairs, allowing traders to take advantage of volatility without paying transaction costs. This can become a meaningful advantage if markets enter a period of extreme fluctuations.

If the conflict scenario continues as expected, oil may become one of the most closely watched assets in the coming months for both macro investors and crypto traders.

5. Conclusion

The conflict between the United States and Iran is not only a geopolitical issue but is also becoming a key factor shaping global energy markets in the short term.

If tensions continue and major oil transportation routes such as the Strait of Hormuz remain disrupted, upward pressure on oil prices will likely persist.

This could push global inflation higher and potentially influence the monetary policy decisions of major central banks, particularly the Federal Reserve.

In such an environment, the oil market is likely to remain highly volatile and could become one of the most important assets to monitor for both macro investors and short-term traders.

Disclaimer: This content does not constitute investment, tax, legal, financial, or accounting advice. MEXC provides this information for educational purposes only. Always do your own research, understand the risks, and invest responsibly.