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(NEW YORK) — Thousands of canceled flights in Europe over a spike in jet fuel prices. An energy emergency declaration in the Philippines. A two-week school holiday in Pakistan to conserve fuel used by commuters.

The U.S.-Israeli war with Iran triggered dramatic steps in a slew of countries bent on weathering one of the worst oil shocks in history, stoking concern by some about a possible global recession.

Economists disagree about whether the standoff in the Strait of Hormuz will ultimately drive the world’s economy into a downturn, in part because the duration of the waterway’s effective closure remains murky. The outcome holds implications for the livelihoods of billions of people and the performance of companies big and small across the globe.

Some analysts said they fear the oil shortage will soon become so dire that crude prices could rise sharply driving up costs for an array of goods and hammering shoppers. The fallout could squeeze businesses and shrink growth, they said.

Others proved more optimistic, pointing to a smaller rise in oil prices than some feared and a recent track record of economic resilience in the face of trade wars and other turmoil. A worldwide downturn, they said, would require a much more prolonged closure of the strait.

“The longer this drags on, the costlier it becomes,” Ryan Sweet, chief global economist at Oxford Economics, told ABC News.

Still, Sweet added: “Whether or not this will cause a global recession, it’s premature to say.”

The conflict, which began on Feb. 28, prompted Iran’s effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the global supply of oil and natural gas.

The vast majority of oil that passes through the strait is bound for Asian markets. But since oil prices are set on a global market, prices have climbed for just about everyone as buyers chase fewer barrels of crude.

On Tuesday, Trump extended a ceasefire with Iran, averting a resumption of wide hostilities, although the move left the strait under Iran’s effective control. The U.S., meanwhile, has mounted a blockade of Iranian ports in the strait, squeezing a key source of government funds derived from oil exports, while exacerbating the global petroleum shortage.

The Brent futures price, the benchmark index for global oil trading, registered at about $106 a barrel on Friday. That price stood about 50% higher than its pre-war level.

Higher oil and gasoline prices risk a pinch at the pump, as well as additional costs for just about every product delivered across the globe on trucks or ships that run on diesel fuel.

“Oil feeds into inflation, which reduces raw purchasing power — how much bang for their buck people have,” Sweet said. “That slows the economy.”

Still, oil prices remain below the highs reached after some previous economic shocks. In 2022, the price of Brent crude surged above $139 per barrel in March, just weeks after the Russian invasion of Ukraine. During the 2008 financial crisis, U.S. gasoline prices shot up as high as $147 a barrel.

Some economic forecasts issued in recent weeks projected that global economic growth could escape the crisis relatively unscathed, as long as the war reaches a resolution in short order and oil prices avoid a steeper climb.

The Organisation for Economic Co-operation and Development (OECD) last month predicted that global gross domestic product (GDP) growth would “remain broadly stable” at 2.9% in 2026. That forecast matched projections issued by the OECD in December, before the war.

The OECD touted strong tech investment and lower-than-expected tariffs, citing “carry-over from robust outcomes in 2025.”

Earlier this month, the International Monetary Fund (IMF) projected that GDP growth would register at a solid pace of 3.1% in 2026, noting that the global economy had withstood “higher trade barriers and elevated uncertainty last year.”

The forecasts from the OECD and IMF worked under the assumption of a resolution to the conflict by the middle of this year, acknowledging the impact could worsen if it stretches on for longer.

Some economists, by contrast, consider the economic threat a more urgent risk.

Paul Krugman, an economics professor at the City University of New York Graduate Center and a former columnist at the New York Times, criticized the IMF projection on Substack on Monday, faulting the group for “seriously underestimating how badly the global economy could be hit.”

“In my view, a full-on global recession is more likely than not if the Strait remains closed for, say, another three months, which seems all too possible,” he said.

Rosier forecasts fail to adequately factor in the risk of a significant rise in oil prices over the near term, Krugman said, warning of widespread “demand destruction” as oil becomes increasingly scarce. Under such a scenario, a surge in oil prices would make it unaffordable for many buyers, forcing them to find alternatives or forgo energy use altogether.

Technical definitions vary about what constitutes a global recession, but the gist is a period of sluggish or negative economic growth. For the World Bank, a global recession amounts to a contraction in global per capita GDP; while the IMF considers GDP growth below 2% sufficient to warrant the label of a recession.

A six-month impasse in the strait could push global oil prices as high as $190 in August, Oxford Economics said in a blog post last month. That price shock would send global inflation to 7.7%, near its peak in 2022, the independent economic advisory firm said.

“But unlike 2022, when the global economy kept growing through the price shock, the severity of this disruption tips the world into outright contraction,” Oxford Economics added.

In addition to its optimistic baseline projection, the IMF issued a downbeat prediction in the event of a more severe disruption of oil markets that stretches into next year. Under those circumstances, the global economy “would come close to experiencing a recession,” the IMF said, noting that it defines a global recession as annual GDP growth below 2%.

Growth below 2% has happened four times since 1980, the group said.

Across the board, economists acknowledged a high degree of uncertainty as the Iran war unfolds. Plus, some said, the negative effects will be unevenly distributed, hitting harder in low-income countries as well as those who depend on oil that passes through the strait.

While the full extent of economic wreckage remains unknown, the prospect of an extended global impact is all but certain, Sweet said.

“This will take a long time to get back up to resembling anything close to normal,” he added.

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(LOS ANGELES) — A Chevron gas station in Los Angeles elicited headlines in recent weeks for charging an eye-popping $8.71 a gallon, becoming an emblem for the spike in fuel costs set off by the Iran war.

Sky-high gas prices nationwide owe primarily to a historic oil shock that followed Iran’s effective closure of the Strait of Hormuz. But a lesser-known contributor helps account for just how high prices have gotten, at least at some name-brand stations selling fuel from the likes of Chevron, Shell and ExxonMobil.

Branded stations, which make up almost half of gas stations nationwide, charge about 6 cents more per gallon on average than their unbranded counterparts, according to data from the Oil Price Information Service (OPIS), a Dow Jones company, for the week ending on May 2. That price gap marks little change from where it stood before the war, OPIS data showed.

In at least one state, the price disparity runs significantly higher. Gas at a Chevron station in California costs an average of 48 cents more per gallon than the price at an unbranded station, the California Energy Commission (CEC) found in 2024. After Chevron, the most expensive average gas prices in California were found at Shell, 76 and Arco-branded stations, the CEC said.

Some analysts said the higher price of branded gas is due to additional costs, such as proprietary additives in the fuel, as well as a producer’s marketing budget and the payment forked over by stations for guaranteed access to its gas – costs that are passed on to consumers.

Other analysts and a California state watchdog, however, have said that the price disparity may stem from the market dominance of a handful of companies, allowing them to drive up the retail price.

The scrutiny comes as some large oil companies like British Petroleum, Valero and Marathon Petroleum report soaring profits amid the Iran war, though Chevron and Exxon saw profits decline due in part to one-time paper losses stemming from financial hedges meant to protect them against a possible price drop.

The price of an average gallon of gas currently stands at $4.52, an increase of $1.54 per gallon since the war began on Feb. 28, AAA data showed. That amounts to a nearly 52% jump in about two-and-a-half months.

Patrick Penfield, a professor of supply chain practice at Syracuse University, said the recent surge in prices could prompt a reexamination of the costs baked into the price at the pump, including the added charge for branded gas.

“When you see such big price increases for gasoline, everything should be looked at,” Penfield said.

Chevron did not directly respond to an ABC News request for comment. However, Jim Stanley, director of media relations at the Western States Petroleum Association, a industry trade group, contacted ABC News at Chevron’s request.

Drivers choose branded gas stations as a matter of customer preference centered on issues like lighting, bathroom cleanliness or location, Stanley said.

“Any branded product – whether it’s medication or groceries or clothing – is going to generally cost more than a generic alternative,” he added.

Stanley further said roughly 95% of branded gas stations operate as franchises, meaning they enter into agreements with big-name companies but retain self-ownership.

“Branded gas stations can have these brand standards that they hold their franchisees to: a higher standard than an independently owned store,” Stanley added.

Kelly Davila, a spokesperson for Exxon, said the company doesn’t “own or operate our retail stations.”

Shell declined to respond to ABC News’ request for comment.

Phillips 66, the parent company of 76, did not respond to ABC News’ request for comment. Neither did Marathon Petroleum, the parent company of Arco.

Branded gas stations account for about 45% of stations nationwide, selling gas under the name of a major fuel company, OPIS data shows. Each of the brands touts a unique blend of additives that it says improves the gasoline and eases its effect on car engines. The extra ingredients go beyond the minimum standards mandated by federal and some state regulators, Denton Cinquegrana, chief oil analyst at Dow Jones Energy, told ABC News.

“At the end of the day, all gasoline has to meet a federal standard,” Cinquegrana said. “The branded gasoline goes above and beyond that minimum requirement.”

Higher prices charged by name-brand stations – a dynamic that stretches back decades – can be traced in part to spending on the development and production of the additives, Cinquegrana added: “They’re trying to recoup some of that investment.”

Some analysts, however, said it remains unclear whether the added ingredients deliver a meaningfully improved product.

“Regardless of each company’s claim, there is not sound evidence supporting the fact that additives do indeed improve the quality of gasoline, at least to the extent that the consumers perceive it to,” a study issued by the non-profit RAND corporation found in 2010.

The California Division of Petroleum Market Oversight (DPMO), a state watchdog agency, last year said it was “unable to independently verify claims that branded gasoline is superior to unbranded gasoline.”

When asked about studies disputing the value of additives, Stanley, of the Western States Petroleum Association, declined to comment.

The higher price of branded gas also owes to marketing budgets borne by the big-name companies as well as elevated costs paid by retailers as part of agreements with the brands that guarantee them priority access in the event of a supply shortage, the U.S. Government Accountability Office said in a study of the issue published in 2005.

“Gas stations pay more for a contract for branded gasoline because they have a guarantee of supply. And they have a major global brand backing them up,” Cinquegrana said.

Some analysts and a California watchdog disputed those explanations. Rather, they said, the higher prices may reflect market power enjoyed by the large firms, giving them leeway to raise prices without fear of competition.

“My own reading of the data is that the branded companies are able to take advantage of a lack of a competitive market and are acting almost like an oligopoly,” Paasha Mahdavi, a professor of energy governance and political economy at the University of California, Santa Barbara, told ABC News, using a term that describes an industry dominated by a small number of companies.

Mahdavi focused on the relatively large price gap in California between branded and unbranded gas, which has widened in recent years.

In 2019, branded gas from companies like ExxonMobil, Arco, Valero and Chevron cost an average of 20 cents more per gallon in California; within five years, that price disparity had climbed to 31 cents, according to a DPMO study issued last year. Over that same period, the profitability of oil refiners in California has increased, DPMO said.

The rise in refinery profitability may be traced to the “exercise of market power by gasoline suppliers,” DPMO added, saying 90% of in-state refining capacity is controlled by four companies. As a result, elevated wholesale prices could be passed along the supply chain, DPMO said.

The largest companies appear to have “pretty strong control of not only upstream assets like oil and gas, but also control of the gas stations that are preferred by consumers based on location,” Mahdavi said. “They’re able to charge a higher premium.”

Valero did not respond to ABC News’ request for comment.

Stanley, of the Western States Petroleum Association, said he is unsure why California features a larger gap in price between branded and unbranded gas than other states. One contributor, he said, could be the relatively low density of gas stations in the state.

“Competition brings down costs. When a retailer doesn’t see that same level of competition, you can see that reflected in higher prices.”

Stanley faulted environmental regulations in California for high overall gas prices.

“Branded or unbranded, gas in California is the most expensive in the country. That’s because of supply constraints that have been created by state policies.”

Mahdavi further said that the locations of branded gas stations may carry additional costs due to higher rents, accounting for some of the price gap.

The rise in prices during the Iran war offers an opportunity to revisit the factors that contribute to the price at the pump, according to Mahdavi.

“We can shine more light on what is driving these higher prices,” he said.

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(NEW YORK) — A threat of U.S. attacks on power plants in Iran continues to loom over the Middle East conflict, even after Trump pushed back a self-imposed deadline for the second time.

In a post on social media on Thursday, Trump said he was “pausing the period of Energy Plant destruction” until April 6.

In the event of such an attack, Iran has said it would carry out tit-for-tat strikes against energy infrastructure in neighboring countries, according to Iran’s Fars News Agency state media.

The threatened escalation risks a humanitarian crisis for tens of millions of people in the region, potentially restricting their access to basic essentials such as electricity, food, water and health care, some analysts told ABC News.

Distress could spread to countries beyond the Gulf if dire conditions prompt residents to flee across borders and infrastructure damage worsens a global oil shock, analysts said.

“This will be bad for everybody,” Mushfiq Mobarak, a professor of economics at Yale University, told ABC News. “The most damaging effects — the largest welfare costs — will be on Iranian civilians.”

On March 21, Trump vowed to “obliterate” power plants in Iran within 48 hours unless the country eases its blockade of the Strait of Hormuz. Before the deadline arrived on Monday night in Washington, D.C., Trump posted on social media that he was postponing the ultimatum for five days, claiming “productive conversations” had been held between the U.S. and Iran.

On Thursday — one day before the new deadline was set to arrive — Trump said he would postpone the deadline for an additional 10 days.

Negotiations between the U.S. and Iran are “ongoing,” Trump claimed. Iranian officials have denied that the country is in talks with the U.S.

Meanwhile, Iran has pledged to retaliate against civilian infrastructure in nearby countries in response to an attack on its energy sites.

“Immediately after the power plants and infrastructure in our country are targeted, the critical infrastructure, energy infrastructure, and oil facilities throughout the region will be considered legitimate targets,” Iranian parliament speaker Mohammad Bagher Qalibaf said in a post on X on Sunday.

Natural gas supplies roughly 79% of electricity used in Iran, according to the International Energy Administration, a global energy policy group based in Paris, France.

The majority of the nation’s natural gas is supplied by South Pars, the largest natural gas field in the world. An Israeli attack on South Pars last week threatened severe impact in Iran and neighboring Gulf states, analysts previously told ABC News.

Potential U.S. attacks on energy infrastructure could cut off electricity access for many of the 92 million people in Iran, while at the same time discontinuing power for critical institutions like hospitals, Mobarak said.

“If hospitals lose power, that’s very dangerous,” Mobarak said.

The health care impact would come as some hospitals in the region face perilous conditions, according to the World Health Organization (WHO). Health care facilities faced a total of 13 attacks as of March 5, the WHO said, voicing concern about “health systems and lives at risk in the region.”

Attacks on civilian infrastructure in Iran could also worsen food shortages and price increases, Michael Werz, a senior fellow at the Council on Foreign Relations, told ABC News. Annual food inflation in Iran stood at 72% in December, before the war began, The Wall Street Journal reported.

Any further deterioration of food access, Werz said, could have a “massive impact.”

Potential Iranian retaliation against civilian sites threatens desperate conditions for millions of people in nearby countries Oman, Qatar, Kuwait, Saudi Arabia, the United Arab Emirates (UAE), Iraq and Israel, some analysts said.

Those countries depend in large part on water desalination plants for drinking water due to arid conditions in the region, making those facilities a major potential vulnerability, Ginger Matchett, assistant director with the GeoStrategy Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security, said in a blog post.

Desalinated drinking water accounts for at least 90% of the supply in Kuwait, Bahrain and Qatar, while Israel and Oman each depend on such plants for 80% of their drinking water, Matchett said.

“If Iran successfully destroyed the Gulf’s desalination infrastructure, then the consequences could be devastating,” Matchett added.

In early March, desalination plants in Iran and Bahrain were targeted in the fighting, and missile-related damage has also been reported at sites in Kuwait and the UAE.

Potential retaliatory attacks on oil and gas sites in the region also threaten to deepen and prolong a global oil crisis, driving up fuel costs and raising prices for essential goods worldwide, some analysts said.

Global oil prices skyrocketed in recent weeks after the war prompted closure of the Strait of Hormuz, a critical waterway for global oil and natural gas delivery. Consumers have held out hope for a reopening of the strait and a relatively speedy recovery, but facility repairs could stretch on for months and choke off fuel supply in the meantime.

Qatari authorities said last week that Iranian ballistic missile attacks caused fires and “extensive damage” at the Ras Laffan terminal, which carries about one-fifth of the global supply of liquid natural gas. An Iranian missile attack struck oil refineries last week in Haifa, Israel, where fire brigades extinguished a fire that broke out at the site, Israel Fire and Rescue said.

The Philippines has declared a national energy emergency in response to the U.S.-Israeli war with Iran, while South Korea has called on residents to ride bicycles for short trips and reduce the length of showers. Thailand and Vietnam have also asked citizens to take steps to curtail energy use.

Roughly 80% of the oil that typically passes through the strait is bound for Asian markets, according to the IEA. Still, the oil shock will raise gas prices worldwide, since energy is sold on a global market, Mobarak said.

“This will have effects for gas consumers across the world,” he added.

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