US-Iran conflict cost reaches $38 billion, CBO estimates

Washington: The United States has spent nearly $38 billion on its military operations against Iran through July, with the ongoing campaign expected to cost the Pentagon a further $2 billion to $3 billion every month, the Congressional Budget Office (CBO) has said.

The independent fiscal agency said the conflict had placed additional pressure on US defence resources, particularly missile-defence systems, while also contributing to higher energy prices and inflation.

The CBO’s assessment covers the military, logistical and broader economic impact of Operation Epic Fury, which was launched on February 28. A ceasefire came into effect on April 8, but President Donald Trump announced the resumption of hostilities on July 10 after attacks on vessels travelling through the Strait of Hormuz.

The Pentagon’s expenditure included $21.7 billion for replenishing missiles and other ammunition. A further $10.4 billion was spent on extra flight operations, while increased fuel costs accounted for $2.7 billion. Equipment destroyed in combat cost an estimated $1.9 billion, with another $1.5 billion spent on other operational requirements.

Missile-defence interceptors made up the biggest part of the ammunition replacement bill, costing $13.1 billion. The replacement of land-attack cruise missiles accounted for another $7.3 billion.

The CBO stressed that its calculation was not a complete estimate of the war’s financial impact. It did not include the cost of restoring US military bases damaged in Iranian strikes, or expenditure on diplomatic initiatives, overseas assistance and long-term healthcare or disability support for military personnel and veterans.

The agency said the Pentagon had failed to provide some of the data requested for the assessment. As a result, it used information from government databases and publicly available reports, and cautioned that the figures involved “considerable uncertainty”.

The report also raised concerns about the country’s ability to replenish its missile-defence arsenal. Based on reported usage and the total number of interceptors purchased by the Department of Defence, the US may have used between 50 and 67 per cent of its stock since June 2025.

Even with faster procurement, restoring the depleted inventory could take five years or more, the CBO said. It warned that the shortage could pose a serious risk in a future conflict with an adversary capable of launching large numbers of ballistic and cruise missiles.

China’s missile capabilities could become especially significant in any confrontation involving Taiwan, the report added.

The fighting has further affected global energy and shipping routes. Oil and gas movements through the Strait of Hormuz, along with commercial shipping in the Red Sea, have been disrupted, raising energy costs. The CBO estimated that the increase contributed 2.3 percentage points to the annualised US inflation rate in the April-June quarter.

Inflation in the first quarter of 2027 could be 0.5 percentage points higher than projected before the conflict, according to the agency. The rise in prices could also increase borrowing costs for the US government by pushing up yields on Treasury securities.

Defence Secretary Pete Hegseth had earlier told lawmakers that the military campaign would cost $37.5 billion through September. The White House has sought an additional $87.6 billion in funding, of which $67.1 billion has been earmarked for the Pentagon.

The CBO estimated that $42.3 billion of the proposed Pentagon funding was directly linked to the conflict.