Iran war, oil price surge worsen K-shaped economy, say economists
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Rising oil prices and the fallout of the U.S.-Iran war are worsening the economic divide, experts say.
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In this article USO XOM CVX Follow your favorite stocks CREATE FREE ACCOUNT A sign displays the prices of unleaded gasoline at a Chevron gas station in Palo Alto, California, US, on Tuesday, March 10, 2026. David Paul Morris | Bloomberg | Getty Images The war in Iran — and the accompanying spike in oil and gasoline prices — risks exacerbating the so-called K-shaped economy , economists said. The term, which emerged during the Covid-19 pandemic, uses the letter K to illustrate diverging economic experiences: higher-income households do better and better, forming the upward arm, while lower-income households fall further behind on the downward arm. watch now VIDEO 4:40 04:40 No ceiling for retail gasoline prices until resolution in Iran, says OPIS' Denton Cinquegrana The Exchange Economists said a rise in oil and gasoline prices acts as a tax on household spending power that tends to hurt low earners more than the wealthy. Nicholas Bloom, an economics professor at Stanford University, said he worries that the dynamic fuels the economy's K shape. "That, I think, is a major concern as an economist: inequality," Bloom said Monday during a webinar on the economic consequences of the Iran war. Iran war leads oil, gasoline prices to soar A driver refuels a vehicle at a Chevron gas station in Rodeo, California, US, on Monday, March 2, 2026. David Paul Morris | Bloomberg | Getty Images The war in Iran has effectively halted traffic through the Strait of Hormuz, a critical maritime shipping route for global oil supplies, amounting to the biggest oil supply disruption in history . Oil prices — and those for gasoline, which is refined from crude oil — have soared as a result. Brent crude, the global benchmark for oil, is up more than 40% since the conflict began on Feb. 28, to about $102 per barrel as of 2 p.m. E.T. on Tuesday. The national average gasoline price reached $3.79 a gallon as of Tuesday, up about 87 cents per gallon, or 30%, from a month ago, according to AAA . Read...
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