Fact Sheet: Costs of the Iran War

Eight months into what he claimed would be a swift military operation, President Donald Trump seems to have no plan to exit the war in Iran, despite the massive cost to American families, national security, and stability in the Middle East. Iran continues to strike ships in the Strait of Hormuz, and the Iranian-aligned Houthi forces have opened a new front with Saudi Arabia, trading strikes that have killed at least 20 in the kingdom and 1,282 in Yemen in the past three months. The war has already dramatically increased energy prices around the world, with prices for Brent crude reaching a five-month high of $112 per barrel on October 22 following Houthi attacks on Saudi energy sites and vessels in the Gulf of Aden. Despite President Trump’s efforts to secure diesel from a U.S. adversary—Russian President Vladimir Putin—there is no sign that prices will return to their prewar levels for the foreseeable future. Iran currently has no incentive to relinquish control over the Strait of Hormuz. The administration has lately shown little interest in returning to ceasefire negotiations—largely because the war has been a resounding disaster for the United States—giving Iran the upper hand.

Accounting for war spending; elevated interest rates; and higher prices for groceries, energy, and other items, the war has cost the United States almost $2,000 per household, according to Moody’s chief economist Mark Zandi. And as long as the Trump administration continues its war of choice, these costs to American families will only continue to rise.

Costs of the Iran war

Defense costs

• Twenty-one American service members have been killed, and at least another 865 have been wounded, in the war as of October 10. The Pentagon has failed to provide regular updates on casualties, and it has not attributed those that occurred after the mid-June ceasefire agreement to the war.
• Around 50,000 American service members are deployed to the region, 10,000 more than standard peacetime levels, and Secretary of Defense Pete Hegseth has estimated they will remain until at least early 2027. In early October, the Pentagon decided to send a third carrier strike group and other assets and personnel—around 9,000 sailors and Marines altogether—to the region.
• The Pentagon has provided neither adequate estimates of the costs of operations to date nor enough clarity and detail around the nature of operations to allow for precise, independent accounting. In September, the Congressional Budget Office (CBO) estimated that the Department of Defense had incurred approximately $38 billion in costs related to the war. Reliable, independent estimates place the cost at potentially higher: the Center for Strategic and International Studies estimated costs had already reached between $34 billion and $42 billion only as of late June, three months before the September CBO estimate. Other estimates, which assume a broader range of costs and higher burn rate for munitions, suggest the cost of Operation Epic Fury could have reached more than $100 billion.
• The war has also diverted resources away from more pressing defense needs. The rapid burn rate of munitions—particularly precision munitions such as Patriot interceptors—has rapidly depleted weapons stockpiles, and the Trump administration has held up weapons destined for Ukraine to conserve its supplies. The administration has also moved significant strategic assets away from Europe and Asia, creating serious vulnerabilities for deterrence.

Domestic economic costs

• Mark Zandi, the chief economist at Moody’s Analytics, estimated as of early October that the costs of the Trump administration’s war with Iran had almost reached $2,000 per household.
• According to Zandi, the war’s costs “have absorbed about half the average American household’s income gain.”
• Gas and diesel prices are 43 percent and 68 percent higher, respectively, than before the war. The national average price for regular gasoline was $4.27 per gallon as of October 22, compared with $2.98 on February 27, according to (See Figure 1)
• Prices for fuel remain higher than before the war. As of October 22, Americans had paid more than $141 billion in extra costs for gas and diesel since the war began, according to the Brown University Iran War Energy Cost Tracker.

• As of October 22, 11 states (Arizona, Michigan, Illinois, Utah, Idaho, Alaska, Oregon, Nevada, Washington, Hawaii, and California) had regular gas prices above $4.50 per gallon. The states with the highest percentage increases (50 percent or more) relative to prices before the war were Minnesota, Mississippi, Illinois, Michigan, New Mexico, Kansas, Iowa, Wisconsin, South Dakota, North Dakota, Nebraska, Montana, Idaho, Oklahoma, Wyoming, and Utah.
• Home heating oil costs have hit a record high as a result of the war. In Maine, the average household will need to pay $674 more this year to fill their heating oil tank than last year.

• The inflation rate in the United States jumped to 3.7 percent year over year in September, as the war drove up prices for American families. Prior to the start of the war, the annual rate of inflation was just 4 percent.
• The U.S. Department of Agriculture had expected grocery prices to rise 1.7 percent this year, but it now expects a 2.4 percent increase. In part, this can be attributed to the administration’s war in Iran driving up the cost of diesel, fertilizer, and other expenses incurred by America’s farmers and ranchers.
• All eight major fertilizers used by farmers in the United States cost more today than they did a year ago, with analysts predicting that prices could rise even further in the spring. According to a report released earlier this week by S&P Global, fertilizer and fuel shortages coupled with the effects of an extremely strong El Niño have raised the possibility of a global food crisis next year.
• Food prices have increased 2.5 percent since September 2025, according to the U.S. Bureau of Labor Statistics. The price for fruits and vegetables rose even more, 3.7 percent higher than a year ago.
• The 30-year Treasury yield reached 478 percent on October 19, close to the highest cost of borrowing for the U.S. government and consumers in nearly two decades. The increase has been driven by Trump’s war with Iran and the threat of persistent inflation. The rise in borrowing costs threatens to increase mortgage rates and credit card rates for Americans, since long-term bond yields help set interest payments for various consumer loans. The average rate on a 30-year fixed-rate mortgage is now well more than 7 percent, after being near multiyear lows before the war.

Geopolitical costs

• The Trump administration recently announced a potentially unlawful new energy deal with Russian dictator Vladimir Putin for Russia to supply 25 million barrels of diesel to the United States and global markets immediately, with more to follow, while also lifting sanctions on Russian diesel in a play to lower the price of diesel in the United States. Estimates put the cost savings from the diesel deal at only 2 to 5 cents per gallon; diesel is up about $2.60 since before the war in Iran began. The deal will also allow U.S. dollars to flow to Russia, which has only profited from the war in Iran: Its profits from the sale of oil and gas, as well as the shortage of munitions available to Ukraine, have strengthened its position in its illegal war on Kyiv.
• China has successfully exploited the conflict to recast itself as a responsible international actor—contrasting itself favorably with the Trump administration’s unilateralism and militarism—and strengthened its negotiating position with the United States.
• The redeployment of critical U.S. military assets, especially missile defense batteries in South Korea, and consumption of munitions needed by Ukraine have weakened allied security and raised questions about U.S. reliability.
• Iran’s ability to survive the combined U.S.-Israeli effort to overthrow the regime has emboldened Tehran, weakening U.S. deterrence and encouraging Iran to adhere to maximalist positions on control of the Strait of Hormuz and its nuclear program.
• The Trump administration’s conduct during the Iran war—with strikes on civilians and civilian infrastructure (such as the one that killed 156 people, including 120 schoolchildren, in Minab) and rhetoric verging on calls for war crimes—has eroded the professionalism and legitimacy critical to American military power, a serious reputational loss.
• The U.S. failure to neutralize Iran’s threat to Gulf partners has both reduced American influence over key international players and negatively affected their economic growth at a time when the region faces massive capital needs, such as for reconstruction and stabilization in Gaza, Lebanon, and other locations.
• The renewed attacks between Houthi rebels in Yemen and Saudi Arabia pose another potential chokepoint in the Iran war, as Houthi control of the Bab el-Mandeb Strait (in addition to the continued blockage of the Strait of Hormuz) could further drive up energy costs, destabilize supply chain routes, and disrupt the global economy. The renewed fighting also increasingly risks a return to a hot war between Saudi Arabia and the Houthis.

The authors would like to thank Damian Murphy, Emily Gee, Trevor Higgins, Devon Lespier, Mimla Wardak, Christian Rodriguez, Bill Rapp, Steve Bonitatibus for their contributions.