U.S. small-business sentiment dropped to an 11-month low in ‌March as a surge in oil prices because of the war in Iran overshadowed the benefits from low taxes, a survey showed.

The National Federation of Independent Business said Tuesday its Small Business Optimism Index ‌dropped 3.0 points to 95.8 last month, the lowest ​level since April 2025, and pushed it below its 52-year average of 98.0.

The survey's uncertainty index ⁠jumped 4 points to 92, well above its historical average ​of 68. The survey followed on the heels of news last ⁠week from the University of Michigan's Surveys of Consumers that its Consumer Sentiment Index plunged to a record low in April.

A rebound in both small ‌business and consumer sentiment is unlikely in the near ​term as oil ‌prices shot up on Monday to more than $100 a barrel after the U.S. military ‌said it would blockade ships leaving Iran's ports. Crude prices have jumped more than 35% since the U.S.-Israeli war with Iran ⁠started at the end of ‌February.

"The 20% Small Business ⁠Deduction and other supportive small business tax provisions in the Working Families ⁠Tax Cut ⁠Act have had many positives for small business owners," said NFIB Chief Economist Bill Dunkelberg.

"However, ‌the dramatic spike in oil prices has spooked consumers and owners alike," Dunkelberg added. "Small business owners are having to absorb those higher input costs ‌and pass them ​along to their customers."

Businesses ‌were pessimistic about profit and sales prospects. The share of owners expecting better business conditions dropped 7 points ​to a seasonally adjusted 11%, the lowest since October 2024 and marking the third consecutive monthly decline.