Begin forwarded message:From: Rajan Menon <rajanmenon@substack.com>
Date: March 17, 2026 at 8:15:50 AM EDT
To: rmenonnyc@gmail.com
Subject: Trump's Military Misadventure in Iran is Also Proving to Be An Economic Disaster
Reply-To: Rajan Menon <reply+35ubje&7x0p7&&a002842abec50ce0df5be4f787a95e1f2b6306ee954fc604f01906a814d5c7d7@mg1.substack.com>
Trump's Military Misadventure in Iran is Also Proving to Be An Economic Disaster
The price shocks could hurt him in November.
READ IN APP [1,475 words—a seven-minute read]
The American-Israeli war has entered week three. The longer it lasts, the more its economic shocks will hurt Trump politically—especially if he keeps insisting that Americans must simply tough it out until Iran is defeated, an outcome that seems less likely by the day.
GOP leaders are already anxious. Some are even warning openly that war-related price increases could produce a debacle in the November midterm elections. Despite his public bravado, Trump understands this danger. Sooner or later, he will have to find a way to end a war he can’t win—but also cannot easily abandon abruptly, given his insistence that American, even international, security is at stake.
But he’s trying to find a way out.
The administration apparently approached Iran’s leaders about ceasefire discussions—something Tehran steadfastly rejects. More recently, Trump has called on America’s allies—many of whom he has belittled—to send their warships to ensure the safety of the Strait of Hormuz, through which 30 percent of the world’s crude oil trade flows.
These moves suggest growing panic over spiraling gas prices.
It’s all but impossible to get inside Trump’s head. But one thing is certain: he relishes the untrammeled power he wields, and that power is now at risk. If the Democratic Party wins the midterms, he will find it much harder—perhaps even impossible—to push through policies that even he realizes require Congressional approval.
A Democratic victory will be followed by deeper probes by Congress into the nature of Trump’s ties to Jeffrey Epstein, something even members of his MAGA base want. A recent poll showed that 52 percent of Americans believe Trump launched the war to divert attention from the Epstein saga.
If the GOP loses in November, administration officials—such as FBI director Kash Patel, who has allegedlyused government planes and FBI agents for personal purposes—will be called on the carpet, and Attorney General Pam Bondi and Secretary of War Pete Hegseth will face more and tougher questioning from legislators.
Oil Prices Soar
Gas prices have soared since February 28, the day the war began. Benchmark Brent crude has crossed the $100 mark three times and at one point reached $120. The price fluctuates but has remained well above $66.60, where it stood on February 27. On March 16, the average price was $3.71/gallon compared to $2.92 on February 28—a 24 percent increase.
The price surge follows the closure of the Strait of Hormuz to supertanker traffic and Iran’s relentless attacks on Persian Gulf oil-producing countries’ refineries, loading stations, and ports, and on more than 20 tankers and cargo ships. Iran’s new Supreme Leader Mujtaba Khamenei declared that the Strait will stay closed.
After saying that the US Navy would start escorting tankers through the Strait and then claiming that the waterway, essentially closed to oil traffic, is “in great shape,” Trump now demands that American allies deploy their navies to escort tankers. None has volunteered: they weren’t consulted before takeoff and don’t want to be part of a crash landing. Australia,Britain, France, Germany, Italy, and Spain have gone so far as to rule out policing the Strait, knowing that Iran could strike their warships, or, more easily, the large, slothful tankers their navies will be protecting.
At least 400 tankers filled with oil are trapped inside the Persian Gulf, with many more stuck at the Strait’s entrance. With no way to offload production, Gulf oil-producers are running out of onshore storage capacity and have been forced to cut production.
Saudi Arabia can export oil overland via its East-West pipeline to the Red Sea port of Yanbu. So can the UAE, using its Habshan-Fujairah pipeline, which also terminates at the Red Sea [sic]. But these pipelines can’t transport the two countries’ total export capacity; besides, Iran could target them.
Tehran may also receive help from its allies, the Houthis, who rule Yemen, which abuts the Red Sea. So far, the Houthis have stayed out of the war, but a top Houthi official recently said that could change. If it does, tankers transporting Saudi and UAE oil from Yanbu and Fujairah—Iran attacked the latter with drones on Saturday—through the Red Sea won’t be safe.
On Friday, the United States hit military sites on Kharg Island, which lies about 15 miles off Iran’s coast, and handles 90 percent of Iranian oil exports. Iran reacted by warning that Persian Gulf oil producers’ entire energy infrastructure would be “turned to ashes” if the island’s oil refinery were hit. If Trump lands US Marines on Kharg—he’s ordered 2,500 to redeploy from Okinawa to the Gulf—prices will surge. Moreover, the Marines’ amphibious ships could face massive missile and drone attacks from the high ground provided by the Zagros Mountains on Iran’s mainland.
If the war drags on, today’s oil prices may seem low. Oil market analysts and traders aren’t ruling out prices of $120—or even $200/barrel. The International Energy Agency, coordinating with its 32 members—including the US—plans to release 400 million barrels to reduce, or at least stabilize prices. But that amounts to less than four days of global demand and would be equivalent to slapping a band-aid on a gunshot wound.
There’s no solution to the spiraling energy crisis except a rapid and enduring ceasefire that unblocks the Strait and allows the resumption of crude oil flows, which have plunged from 15 million barrels/day—a third of global exports—to 0.5 million barrels.
Trump says that the oil price surge actually benefits the country: “We make a lot of money.” People filling up at gas stations may have a different view.
It’s About More than Gas Prices
Headlines highlighting rising crude oil prices miss a broader effect. The increasing cost of products that require crude oil or natural gas to produce—such as jet fuel, diesel, urea, and ammonia—is rippling through the economy, burdening consumers and producers alike.
Jet fuel—air travel and freight costs: Passenger and cargo planes require jet fuel, whose average spot price rose from $2.50 a gallon on February 27 to $3.99 on March 13—or by 59.6 percent. Airline companies will eventually pass the added cost on to passengers and have already begun charging as much as 24 percent more on average for domestic flights and a much largerincrement for international trips. Companies like FedEx and UPS will also jack up prices for air deliveries; indeed, on some global routes air freight costs have increased by 70 percent.
Diesel—trucking and supply chains: The United States has about 13 million cargo trucks—counting only vehicles weighing at least 10,000 pounds—and the industry’s revenue totaled $941 billion. They run on diesel, which is made from crude oil. On March 2, diesel retailed for $3.89 a gallon; by March 16 the average national price was approaching $4.99—a 28 percent increase. Individuals and companies will end up paying more for their orders.
Fertilizer—urea and ammonia: Fertilizer prices have increased by a third since Trump attacked Iran, in no small part because Oman, Qatar, and Saudi Arabia are major exporters of urea and ammonia, both essential for producing nitrogen-based fertilizer.
Nearly half the world’s urea exports and one-third of ammonia exports exit the Strait of Hormuz. Saudi Arabia leads the world in urea exports and Oman ranks third. In ammonia exports the two countries rank third and tenth respectively. Even though Oman lies beyond the Strait, Iranian drones have hit oil storage sites at the port of Salalah, forcing a suspension of operations on March 11.
Reduced exports from the Persian Gulf pushed urea prices from $450.76 per ton on February 27 to $598.87 per ton by March 16—an increase of nearly one-third—and ammonia futures jumped by $130 per ton as early as March 11.
Higher fertilizer prices translate into higher food prices, not just for Americans but for everybody else, and the world’s poor will suffer the most. Their plight probably won’t bother Trump, but the risk of losing the American farm vote will. He won all but 11 of the country’s 444 farm-based counties in 2024. Many are in red states the GOP must win to maintain control of the Senate. Farmers already squeezed by Trump’s tariff hikes are now complaining about higher fertilizer prices as planting season nears.
The Political Costs of a Misguided War
Trump’s war on Iran hasn’t turned out to be a Venezuela-like operation. The Islamic Republic remains standing, and its leaders reject the unconditional surrender Trump demands and even refuse negotiations he claims they have sought. The price increases sparked by Trump’s attack on Iran may abate by November, but the anger over a war many Americans opposed could linger—not least because the reasons he cites for starting it remain unconvincing. That will make it hard to exit the quagmire in Iran and still claim victory.
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© 2026 Rajan Menon
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