This is Armchair Economics with Hamish McRae, a subscriber-only newsletter from The i Paper. If you’d like to get this direct to your inbox, every single week, you can sign up here.

This is Armchair Economics with Hamish McRae, a subscriber-only newsletter from The i Paper. If you’d like to get this direct to your inbox, every single week, you can sign up here.

Wars cost money, and the people in the countries which get involved in them have to pay the bill. People can have different views about the wisdom or otherwise of Donald Trump in attacking Iran, but the economics are undeniable.

The longer this war continues the greater the cost to Americans, as well as to people in the rest of the world. The US President knows this, which is why this will not be a long war.

The bill comes in a string of different ways. First and most obvious is the impact on oil and gas prices, though it will take a while before the rise in the price of crude oil and wholesale gas that has already happened has its full impact on the price at the pumps and in household energy bills. But already the average price of gasoline in the US, at over $3.50 a gallon, is up 21 per cent on a month ago and the highest since the middle of 2024.

Some 20 per cent of the world’s oil and a similar proportion of its liquefied natural gas passes through the Strait of Hormuz, and the longer it stays shut the greater the pressure on prices. While it is for the military experts to assess whether the US forces can find a way of guaranteeing safe passage without ending the war, the practical question facing a shipowner right now is whether it is worth the risk. Since three ships have been attacked in the past 24 hours the answer is almost certainly no. So the strait is effectively shut.

The impact on energy........

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