"A sustained $10 increase in oil prices is expected to increase inflation by 0.4% and lower GDP by 0.4%": Apollo Global Management 's ( APO -4.34%) chief economist Torston Slok says oil is fueling U.S. stagflation fears, adding to the effect expected from import tariffs.

Despite high inflation expectations, price pressures have steadily cooled, with May’s CPI at just 2.4%. This suggests public sentiment may be overreacting to tariff headlines.

Oil prices resumed their upward climb and U.S. futures were lower early Tuesday after Israel’s military issued an evacuation warning to 330,000 people in Iran’s capital Tehran. Asian shares were mixed.

Calm returned to Wall Street, and U.S. stocks rallied, while oil prices gave back some of their initial spurts following Israel’s attack on Iranian nuclear and military targets at the end of last week.

A sustained rise in the price of crude oil, which jumped sharply after Israel attacked Iran, could hurt consumers and President Trump’s efforts to bring down energy costs.