U.S. grocery prices can get even more expensive due to oil crisis after Iran strikes

Oil disruption threatens food prices nationwide

American grocery bills could climb even higher thanks to a new oil crisis halfway around the world. U.S. and Israeli strikes on Iran triggered a standoff at the Strait of Hormuz starting Feb. 28, 2026.

Iran’s Revolutionary Guard declared the strait closed and threatened to attack any vessels passing through. Tanker traffic has effectively stopped.

That matters because about 20% of the world’s oil supply moves through that waterway. Brent crude jumped past $81 per barrel, its highest point since June 2025.

If the disruption drags on, diesel prices could rise and push grocery costs up in the months ahead.

Diesel fuels the cost of every grocery trip

About 70% of food in the U.S. rides on diesel-powered trucks.

Transportation makes up roughly 5% of what you pay at the register, so when diesel climbs, trucking companies charge more and stores pass those costs along.

Refrigerated trucks that haul meat, dairy, and produce cost 30% to 50% more to operate than standard rigs. Before the crisis, diesel was expected to average about $3.50 a gallon in 2026, down slightly from 2025.

A lasting oil spike could wipe out that relief.

Groceries have already jumped 30% since 2020

The USDA forecasts grocery prices will rise about 2.5% in 2026, just under the 20-year average. That might sound modest, but it lands on top of nearly 30% in cumulative increases since March 2020.

Overall food prices are expected to climb about 3.1% this year, and seven of the 15 food categories the USDA tracks are rising faster than their historical averages.

Eating out costs even more: restaurant prices are predicted to jump about 3.7%, outpacing what you pay at the store.

Beef leads the price surge

Beef and veal prices ran about 15% higher in January 2026 than a year earlier. Ground beef hit a record of roughly $6.70 a pound in December 2025, up about 72% since 2020.

The USDA expects beef and veal to climb another 5.5% this year. Behind those numbers is a shrinking supply.

The U.S. cattle herd has dropped to about 86.2 million head, its lowest level in 75 years. Years of drought and rising costs for ranchers have driven the decline since 2019.

Beef prices won’t ease anytime soon

Relief is years away. Breeding and raising calves takes time, so the cattle inventory likely won’t grow before 2028 at the earliest.

An outbreak of New World screwworm has kept the U.S.-Mexico border closed to live cattle, cutting off about 1.2 million head of annual imports.

Even with record prices, Americans keep buying beef, and demand has stayed strong. On top of that, major plant closures have reduced U.S. slaughter capacity by about 6.6%, squeezing supply even further.

Coffee drinkers feel the pinch too

Coffee prices jumped nearly 19% year over year in late 2025, and a pound of coffee averaged $9.37 in January 2026. A severe drought in Brazil, the world’s largest coffee producer, shrank harvests.

A 50% tariff on Brazilian coffee imports has added more pressure.

The USDA predicts nonalcoholic beverage prices, driven largely by coffee, will rise about 5.2% in 2026. Your morning cup isn’t getting cheaper anytime soon.

Sugar and sweets see the steepest hikes

Sugar and sweets are forecast to jump 6.7% in 2026, the steepest increase of any grocery category. Candy and chewing gum led the way within that group.

Cocoa costs remain about 70% above 2023 levels, which keeps chocolate prices high.

Fish and seafood, processed fruits and vegetables, and cereal and bakery products are also climbing faster than their historical averages. Across the store, the pressure keeps building on multiple aisles at once.

Eggs and dairy offer some relief

Here’s some good news. Egg prices are expected to drop about 27.4% in 2026 after the bird flu outbreak eased in spring 2025. U.S. egg production has picked up since then.

Retail egg prices fell about 5.3% from December 2025 to January 2026 and sat about 34% lower than a year earlier. Dairy prices are holding relatively steady too, dipping about 0.9% in 2025.

Some big food makers, including General Mills and PepsiCo, have started cutting prices on select items to win shoppers back.

Tariffs keep pushing prices higher

Tariffs still cover more than half of all imported food entering the U.S. The Yale Budget Lab estimates those tariffs could raise food prices by about 1.4% in the short term.

Industry analysts say the full effect of 2025 tariffs may not hit store shelves until mid- to late 2026 because price increases typically lag 12 to 18 months behind cost changes.

The president signed tariff exemptions for some items in November 2025, including beef, fruits, spices, and coffee.

But tariffs on imports from Mexico, Brazil, and the EU continue to affect produce, coffee, pasta, and olive oil.

Lower-income families bear the heaviest burden

A Cornell University economist warned that people on fixed or low incomes will face tough choices as food prices outpace their earnings.

Households in the lowest income bracket spend about a third of their after-tax income on food.

A CFR-Morning Consult poll from January 2026 found 73% of Americans across political parties worry about paying for groceries. Where you live matters too.

Grocery inflation varies by as much as five percentage points from state to state, and households in Hawaii, Vermont, and Alaska face some of the highest costs in the country.

Several factors decide what comes next

If the Strait of Hormuz reopens quickly, the oil spike may fade fast and grocery impact could stay limited.

If the disruption lasts weeks or longer, diesel, fertilizer, and packaging costs could all climb and push food prices higher. Analysts say recent oversupply in the oil market gives a short-term cushion.

The Supreme Court is also weighing a case that could strike down some of the broadest tariffs, which may bring relief.

Cattle herd rebuilding, weather in coffee-growing regions, and trade policy will all shape grocery prices through the rest of 2026.

Prices won’t drop but the pace is slowing

Grocery prices are not expected to fall in 2026, but the pace of increase is slower than the sharp jumps of 2022 and 2023.

The biggest cost drivers right now are beef, coffee, and sugar, each rising well above the overall grocery inflation rate. Diesel and oil add risk on top of that.

A drawn-out Strait of Hormuz crisis could make things worse.

Eggs and dairy offer some breathing room, and shoppers may see more promotions as food companies try to win back customers after years of price hikes.

This article was created with AI assistance and human editing.

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