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Iran‑War Oil Shock Raises U.S. Recession Risk

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War with Iran creates the biggest oil supply disruption ever, spiking fuel costs – The conflict has triggered the largest historic oil supply shock, sending gasoline, diesel and jet‑fuel prices sharply higher [2][3][4][5][6].

Recession odds jumped to 35% as crude briefly hit $119 a barrel – Prediction‑market data from Kalshi show the chance of a U.S. recession rose from about 20% in early February to as high as 35% when oil peaked [7].

Gasoline climbed 50 cents to $3.48 per gallon, shocking consumers – Prices rose from $2.98 before the war to $3.48 on Monday, prompting economists to warn of broader spending strain [4].

Job growth stalled at 116,000 in 2025, the weakest pace since 2002 – The economy added just 116 K jobs last year and has recorded job losses in five of the past nine months [8][9].

Economists flag oil $125/barrel, gas $4.25/gal and 4% inflation as recession thresholds – Chief U.S. economist Joe Brusuelas says crossing any of these levels would likely tip the economy into recession, though current data remain below them [1].

President Trump’s “very complete” war comment helped oil fall to $92/barrel; the U.S. is now a net energy exporter – After the war‑related price surge, oil retreated to $92 a barrel, and the United States’ shift to net exporter status cushions some domestic impact [10].

  • Justin Wolfers, economics professor, University of Michigan – “The US is and has been on the precipice of recession for quite some time. It only requires one thing to knock us over. Could oil do it? Absolutely.”
  • Joe Brusuelas, chief U.S. economist, RSM – “The risk of a recession has materially increased, but we’re not there yet. The US is a $30 trillion dynamic and resilient beast. It has plenty of room to absorb an oil‑based shock.”
  • Diane Swonk, chief economist, KPMG – “The speed with which it’s hitting gas stations has left consumers shocked… But it would need to get a lot worse to get to a recession.”
  • Mark Zandi, chief economist, Moody’s Analytics – “Every sustained $10‑a‑barrel increase in oil prices could cost the typical US household close to an extra $450 annually.”
  • David Kelly, chief global strategist, JPMorgan Asset Management – “It’s a very nasty one‑two punch to the economy… I still bet that the economy will muddle its way through this.”
  • Ed Yardeni, president, Yardeni Research – “I don’t even think oil has to go to $120 or $150 a barrel. If it just stays at $100 and pushes the stock market lower, it could have an adverse impact on higher‑income and higher‑wealth consumers.”
  • Glenn Hubbard, professor, Columbia Business School (former top economist to President George W. Bush) – “This episode obviously raises the risk, but I don’t see it leading to a recession.”

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