Gas Prices Rise After Iran Conflict Disrupts Oil Markets

Higher gasoline prices driven by the Iran conflict are forcing lower-income Americans to cut back on driving and devote a larger share of their budgets to transportation costs. The price increases follow Iranian attacks on energy facilities in the Gulf region, including an air strike on an oil storage terminal in the UAE.

The terminal is one of the few remaining key export points for Gulf oil shipments. People with lower incomes are driving less while spending more on fuel relative to their overall budgets, according to an analysis of consumer behavior. This shift comes as the conflict disrupts oil flows through critical shipping routes.

McDonald's reported strong quarterly earnings but its chief executive warned that sustained high gas prices could reduce future profits. The executive cited potential cutbacks by lower-income consumers who form a significant part of the chain's customer base.

Analysts have projected that fast-food restaurants and similar businesses could see reduced visits from price-sensitive households as transportation costs eat into discretionary spending. This pressure has not yet appeared in current earnings but is expected if fuel prices remain elevated.

The conflict has drawn attention to retirement savings invested in energy infrastructure across the Middle East. Private equity firms have increased holdings in pipelines, terminals, tankers and storage facilities, many of which are now at risk of attack or operational suspension.

One storage facility struck in the UAE is owned by an energy infrastructure company jointly held by a UAE state oil firm, a commodities trader and a private equity investor. That investor's funds include capital from major U.S. public pension plans.

U.S. pensions have directed more assets toward private equity in recent years seeking higher returns. Those firms in turn have financed fossil fuel midstream projects, including in the Gulf region now affected by the conflict. A nonprofit watchdog group monitoring private equity said the events highlight previously underappreciated geopolitical risks in energy shipping.

The group's executive director noted that many investors had not anticipated disruptions to operations in the area. The executive director added that questions remain about whether private equity firms have adequately disclosed such risks to pension beneficiaries and other investors.

The affected pension funds declined to comment on their exposure.

Despite physical risks to existing infrastructure, the conflict could prompt increased investment in supply chain diversification. Higher costs from reliance on vulnerable chokepoints may drive spending on alternative routes and facilities. One major private equity firm has separately moved to acquire oil and gas assets in Oklahoma, citing rising energy demand linked to data center growth for artificial intelligence.

The deal, valued at approximately $1.2 billion, illustrates continued interest in the sector even amid geopolitical tensions. A chief executive at another investment firm observed during a recent economic forum that markets have historically struggled to price geopolitical risks accurately.

The comment underscored concerns that retirees could ultimately bear costs from miscalculated exposures. >"Until a couple of months ago, most people in private equity didn’t think there was a geopolitical risk in shipping LNG in and out of the Gulf.

" — Jim Baker, executive director of the Private Equity Stakeholder Project, May 7, 2026 (Semafor) The direct effects on average Americans have so far centered on gasoline prices, though broader risks to retirement accounts remain under discussion as the conflict continues.