As if tariffs and a weakening economy weren’t enough to worry about, retailers can now add to that list the possibility of a gas price shock in the aftermath of the U.S. attack on Iran’s nuclear sites this past weekend. This is a major concern for stores, who typically see sales fall when people are spending more money at the pump.
USA Today took a stab at answering what might happen next in this arena in a June 23 story headlined “US strikes on Iran could hit American economy at a fragile time.” On the question of a big jump in prices at the pump, the newspaper quoted Federal Reserve Chair Jerome Powell, speaking after the central bank held interest rates steady for the fourth consecutive meeting on June 18, who said:
“What’s tended to happen is when there’s turmoil in the Middle East, you may see a spike in energy prices. Those things don’t generally tend to have lasting effects on inflation, although, of course, in the 1970s, they famously did, because you had a series of very, very large shocks. But we haven’t seen anything like that now.” However, it was not immediately known whether the bombing mission three days after he made that comment was enough to change his assessment.
Offering another take on the situation was energy analyst Rachel Ziemba, who told USA Today the day after the initial attack that oil prices may not trade much higher until and unless there’s a sustained supply shock, like Iran deciding to block oil-tanker traffic the crucial Strait of Hormuz. A day after the bombing raid, Iran’s parliament reportedly approved a measure endorsing just that, though whether it happens comes down to Iran’s Supreme National Security Council.
