US faces billions more in Iran war costs as conflict drags on, CBO warns

Iran had retaliated in the war by blocking the Strait of Hormuz, a critical waterway for oil shipments, sending costs soaring. — AFP pic

First Published: Wednesday, 16 Sep 2026 9:47 AM MYT

WASHINGTON, Sept 16 — The war with Iran cost the US military around US$38 billion as of August 1, the nonpartisan Congressional Budget Office said yesterday with billions more potentially added to the price tag each month the conflict wears on.

“As of August 1, 2026, the armed conflict with Iran has cost (the Department of Defense) approximately US$38 billion,” said the CBO in a report, referring to the war that started after US-Israeli strikes targeting Iran from late February.

It added that depending on the intensity of violence, costs per month could range between US$2-US$3 billion or more if the conflict continued.

The overall figures reflect the cost of replacing expended munitions and equipment lost in battle and increased fuel costs for the military, among other factors, the report said.

The price of replacing munitions used through August 1 was estimated at US$21.7 billion, with CBO noting that such replacements have been the largest single component of costs incurred by the Defense Department in the conflict.

The “main opportunity cost” for the department meanwhile has been the depletion of missile defense interceptors, leaving the United States with reduced inventory for several years.

Comparing the reported expenditures of missile defense interceptors with total numbers the department has bought suggests the United States “has probably used between one-half and two-thirds of its inventory of those munitions since June 2025,” the CBO warned.

The analysis was prepared following a request by Brendan Boyle, the top Democrat on the House Budget Committee, along with other Democratic lawmakers.

In July, Defense Secretary Pete Hegseth estimated the Iran war had cost US$37.5 billion.

The CBO estimated that the main impact on the US economy from the Iran conflict has been inflationary pressure due to oil and natural gas disruptions.

Iran had retaliated in the war by blocking the Strait of Hormuz, a critical waterway for oil shipments, sending costs soaring.

The CBO now estimates that inflation in the first quarter next year would be 0.5 percentage points higher than what it projected in February—referring to the personal consumption expenditures price index.

“Core” inflation, stripping out the volatile food and energy segments, would also likely be 0.3 percentage points higher than earlier predicted.

The higher inflation will also boost interest rates on Treasury securities, the report said. — AFP