IU professor warns Middle East conflict could drive up US prices

LOUISVILLE, Ky. (WDRB) — As fighting continues in the Middle East, Americans could soon begin to feel the financial impact.

Feisal Al Istrabadi, a professor at Indiana University and former Iraqi ambassador to the United Nations, said the economic consequences of the conflict involving Iran are likely to grow if tensions persist.

"I am shedding no tears for Khamenei and the leadership in Iran," Istrabadi said, referring to Iran’s government.

Istrabadi, who was raised in Iraq, questioned what led the United States to move away from negotiations.

"What is it about those negotiations that impelled the president of the United States to use force now," he asked. "What is it that made (President Donald Trump) and his team decide that negotiations were fruitless?"

If the fighting continues, Istrabadi said Americans can expect rising costs.

"We haven’t actually felt the full impact," he said. "If this keeps on, prices will rise precipitously. They have already gone up 7% or more. So you’ll feel it not only at the pump, but in every other aspect of life."

Much of that impact, he said, centers on oil exports and shipping routes in the region.

"The conflict itself has spooked shipping insurers," Istrabadi said. "They have canceled policies. They have raised the premiums on shipping through the Straits of Hormuz."

The Strait of Hormuz is a critical passageway for global oil shipments, and disruptions there can quickly affect energy markets worldwide.

Air travel has also been affected. Several airlines have limited or paused flights to parts of the Middle East through at least Friday as tensions remain high.

Istrabadi also said Iran may view itself as acting in self-defense under international law.

"Iran is the state that has been attacked under international law, including the U.N. Charter," he said. "It has the inherent right of self defense, which it can exercise by targeting U.S. troops anywhere in the region."

While he questioned the legality of the initial attacks, Istrabadi said he is hopeful about Iran’s long-term future.

"I wish the people of Iran well," he said. "And I have no doubt that expatriates are thrilled at the prospect of this regime falling."