Pentagon's direct costs alone estimated at $40 billion

1,000 Tomahawk missiles fired, straining weapons stockpiles

Oil price surge adds $253 in extra spending per household

CPI rises 4.2%, pushing Fed rate cuts further away

Donald Trump has already electronically signed a memorandum of understanding on ending the war after the United States and Iran reached a ceasefire agreement on June 14, local time. [AFP]
Donald Trump has already electronically signed a memorandum of understanding on ending the war after the United States and Iran reached a ceasefire agreement on June 14, local time. [AFP]

By Seo Ji-yeon, The Herald Business

The 107-day war between the United States and Iran may have ended with the signing of a ceasefire memorandum of understanding, but analysts say the economic fallout is only beginning. The Pentagon's direct war costs alone reached roughly $40 billion (61.4 trillion won), while a sharp surge in oil prices has stoked inflation and complicated monetary policy, weighing on the broader US economy.

CNN reported Saturday, citing a preliminary analysis by the Washington-based think tank Center for Strategic and International Studies, that the Pentagon's direct costs from the Iran war totaled approximately $40 billion.

That figure accounts for ammunition expenditures, equipment losses and damage to US military bases, but excludes baseline personnel and equipment maintenance costs — meaning the true total could be even higher.

Ammunition was the single largest expense. CSIS estimated that roughly $26 billion, or about two-thirds of the total, went toward munitions. The United States fired approximately 1,000 Tomahawk cruise missiles during the conflict, each priced at around $2.5 million.

"Long-range, high-performance, high-cost weapons were used in large quantities," said Mark Cancian, a senior adviser at CSIS.

Beyond the price tag, military experts say the more pressing concern is inventory. The war depleted significant quantities of key precision-guided munitions — a factor seen as driving the Pentagon's recent request to Congress for roughly $80 billion in supplemental funding to replenish weapons stockpiles.

The war's costs extended well beyond the military sphere.

Energy markets took a direct hit. International oil prices surged during the conflict, pushing average US gasoline prices above $4 per gallon.

According to energy cost tracking data from Brown University, American households spent an average of $253 more than they would have without the war.

The US Strategic Petroleum Reserve also came under pressure. Reserve levels fell to their lowest point since 1983, while inventories at the Cushing, Oklahoma crude oil storage hub — a key delivery point — dropped to around 20 million barrels.

Rising oil prices ultimately fed through to consumer prices. The Bureau of Labor Statistics reported that the Consumer Price Index rose 4.2 percent year-on-year in May, the highest rate since April 2023.

President Donald Trump has been pressing the Federal Reserve to cut interest rates, but the Fed held its benchmark interest rate steady last week. Markets now expect that war-driven inflationary pressure could delay any rate cut further.


sjy@heraldcorp.com