US-Iran war cost hits $38bn, CBO estimates

Congressional Budget Office expects conflict to add 0.5% to inflation in early 2027 and warns depleted US munitions stockpiles could take five years to replenish WASHINGTON: The six-month US war with Iran has cost $38 billion so far and is projected to add another $3 billion every month, according to an assessment by the Congressional Budget Office (CBO). The nonpartisan congressional budget agency's estimate covers expenses through August 1 and warns that the conflict could also increase US inflation by 0.5% during the first three months of 2027. A large share of the cost stems from the rapid use of munitions, with the CBO estimating that replenishing US stockpiles could take five years. The drawdown has raised concerns over US military readiness in the event of another major conflict. The $38 billion estimate is close to the $37.5 billion cost reported by the US defence secretary during a Senate hearing on July 21. The CBO said shortages of critical munitions, including missile interceptors, could constrain the Pentagon's ability to respond to another major conflict. At the July hearing, the Pentagon sought nearly $90 billion in emergency funding to replenish munitions. The US administration disputed concerns over shortages, maintaining that the military had sufficient munitions and stockpiles to meet its strategic requirements. The CBO estimate does not include the cost of recent strikes on commercial vessels in the Strait of Hormuz or attacks on US military installations in the region. It also excludes borrowing costs associated with financing the war, which could add tens of billions of dollars to the overall bill. Separately, the Pentagon's inspector general put the cost through June 19 at $33.4 billion. The estimate included around $184 million in damage to US diplomatic facilities from Iranian strikes. The conflict has also affected energy markets, with attacks in the Strait of Hormuz and on energy facilities in neighbouring Gulf countries driving up prices. Before the war, roughly 20% of the world's oil passed through the Strait of Hormuz. The additional spending comes as US public debt surpassed $40 trillion in August, adding to concerns over the fiscal impact of a prolonged conflict. Eighteen US military service members have died during the war.