Gas prices hit $4.10 per gallon, mortgage rates climbed to 6.85%, and households across the U.S. face rising costs as the Iran war intensifies, according to multiple reports.
The Iran war has triggered a surge in gas prices, mortgage rates, and household expenses, deepening a consumer affordability crisis. Gas prices hit $4.10 per gallon on Friday, driven by global oil market disruptions and reported attacks on tankers in the Red Sea. These rising costs have strained budgets, with Mark Zandi, chief economist at Moody’s Analytics, estimating the war has cost the average household over $1,200 in additional expenses. Meanwhile, mortgage rates climbed to 6.85% on Thursday, the highest level since June 2025, exacerbating housing affordability challenges.
Gas Prices Surge as War Disrupts Global Oil Markets
Gas prices have soared to $4.10 per gallon, according to NBC News. This spike follows a reported attack on at least two tankers transiting the Red Sea, causing Brent crude oil to briefly surge above $100 per barrel. U.S. crude oil also climbed as high as $92 per barrel, pushing fuel costs higher. Patrick DeHaan, analyst at GasBuddy, warned that hurricane season and potential impacts could further drive prices up, with some predicting the national average could reach $4.20 to $4.30 per gallon.
The financial strain is evident in states like Virginia, where households have paid $1.8 billion more for gas since February, according to a congressional report cited by WTOP. In Michigan, the average household has spent an extra $502 on gasoline, per an analysis by the minority staff of Congress’ Joint Economic Committee. Mark Zandi highlighted that gas prices are costing households $360 more, while groceries and other modes of transportation are costing an additional $240 and $110, respectively. Higher interest rates are also adding another $205 to household bills, he said.
The disruption to oil shipments through the Strait of Hormuz has worsened the crisis. Commercial vessel traffic there has remained extremely low in recent weeks, with just six vessels crossing the waterway on Thursday, according to MarineTraffic data. Zandi noted that the insurance that oil tankers require to operate will be much more expensive given that the Iranian regime can seemingly shut down the strait at will, prolonging the path to prewar prices.
Mortgage Rates Hit 6.85%, Housing Market Slumps
Mortgage rates reached 6.85% on Thursday, the highest level since June 2025, as reported by the Mortgage Bankers Association. This spike has dampened homebuying activity, with mortgage applications to purchase a home falling 7% week over week. The National Association of Realtors noted that pending home sales fell 5.4% from May, with the median existing-home sales price hitting a record $440,600 in June. Lawrence Yun, NAR’s chief economist, attributed the slump to record-high prices and elevated borrowing costs.
The broader economy has felt the pressure. Despite inflation having eased last month to 3.5%, U.S. Treasury yields have risen again, pushing mortgage rates higher. His administration has focused on the nuclear threat, while analysts say the blockade of the Strait of Hormuz has worsened supply chain challenges.
Households Bear the Brunt as Political and Economic Tensions Persist
Virginia’s congressional report highlights the regional impact, with households paying $573 more for gas since the war began. U.S. Sens. Tim Kaine and Mark Warner criticized the situation, calling the war a “war of choice” that has raised costs for utilities, groceries, and gas. Despite proposed relief measures like the Gas Prices Relief Act and the Gas Tax Suspension Act, no successful plans lowered costs, leaving consumers to shoulder the burden.
Economists warn the crisis will persist. Zandi noted that the road back to prewar prices will be long, while Kevin Hassett, the Trump-appointed director of the National Economic Council, claimed the administration’s policies would eventually lower gas prices. However, with the war ongoing and supply chains disrupted, the outlook remains uncertain. As hurricane season approaches, analysts like DeHaan caution that prices could rise further, complicating efforts to stabilize the market.
The broader implications are clear: households are paying more for essentials, while the political landscape remains divided. With upcoming midterm elections, voters in states like Virginia—where gas costs have spiked—have indicated that rising living costs are a critical issue for them. As the war continues, the financial toll on American families shows no sign of abating.
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