Congressional Budget Office warns US war spending on Iran fuels price hikes
Washington – A new study from the Congressional Budget Office (CBO) shows that the United States has already spent nearly $38 billion on its military campaign against Iran, with monthly outlays potentially rising by $2‑$3 billion if the operation continues.
The CBO warns that the conflict is depleting America’s missile‑defense stockpile, inflating energy costs and adding to the nation’s overall inflation rate.
The review examined all costs linked to Operation Epic Fury, which began on February 28 and entered a temporary cease‑fire on April 8. President Trump announced the end of the cease‑fire on July 10, citing attacks on oil tankers traversing the Hormuz Strait.
Of the $38 billion total, $21.7 billion is slated for repurchasing or refurbishing missiles and other arms. The remaining budget includes $10.4 billion for extra flight hours, $2.7 billion for higher fuel prices, $1.9 billion for destroyed equipment, and $1.5 billion for other related missions.
The most significant expense involves re‑arming used weaponry: $13.1 billion for missile‑defense interceptors and $7.3 billion for ground‑based cruise missiles. The estimate excludes costs for repairing U.S. bases damaged by Iranian attacks, diplomatic efforts, foreign aid, or long‑term medical care and disability compensation for wounded service members.
The CBO noted that the Pentagon did not provide the data it requested, forcing reliance on publicly available reports and government databases, which adds a layer of uncertainty to the numbers.
A key finding predicts that by June 2025 the United States could have expended between one‑half and two‑thirds of its missile‑defense interceptors. Even if the Department of Defense accelerated procurement, the CBO says it would still take at least five years to fully restock the depleted arsenal.
The report also flags a strategic risk: a future clash with a nation that fields large numbers of ballistic and cruise missiles could strain U.S. defenses, specifically citing China’s massive missile stockpile as a concern in any Taiwan‑related conflict.
Energy markets have felt the strain as well. Blockades in the Hormuz Strait and the Red Sea have pushed oil and natural‑gas prices upward, contributing to an estimated 2.3‑percentage‑point rise in the annual inflation rate for the second quarter of 2026. The CBO projects that inflation in the first quarter of 2027 could be about 0.5 percentage points higher than pre‑conflict forecasts, which may lift Treasury yields.
Defense Secretary Pete Hegseth told Congress in July that costs could reach $37.5 billion by September. The White House has requested an additional $87.6 billion, of which $67.1 billion is intended for the Pentagon. The CBO estimates roughly $42.3 billion of that request is directly linked to the Iran campaign.