According to a recent report from the U.S. Congressional Budget Office (CBO), the cost of ongoing conflicts between the United States and Iran in the Middle East has reached approximately $38 billion as of August 1, 2026. The report predicts that if the intensity of the conflicts increases to a level similar to what was experienced in July, the monthly cost could reach $3 billion.
Review of Conflict-Related Costs
The CBO, a nonpartisan entity that provides economic and budgetary analysis for the U.S. Congress, examined four categories of costs related to this conflict in its report titled "Cost Estimate of Military Operations Against Iran": operational, logistical, and maintenance costs of the Department of Defense (DoD), opportunity costs, economic costs resulting from disruptions and price increases, and potential additional costs including diplomatic operations and foreign aid.
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Of the estimated $38 billion, the CBO has indicated that a significant portion is related to the cost of replacing expended munitions and lost equipment in battle, increased flight hours, other military operations, and high fuel costs.
Economic and Budgetary Implications
The CBO report also highlights the broader budgetary implications of the conflict, noting that the government requested an additional $87.6 billion in funding in June, which includes $67.1 billion for the Department of Defense. Part of this request, valued at $42.3 billion, is directly related to the conflict and is about 10% higher than the DoD's cost estimates.
In addition to direct military costs, the CBO identified the high costs of missile defense systems as the largest opportunity cost for the DoD. This conflict has also had economic impacts beyond military costs, particularly through disruptions in oil and natural gas transportation from the Strait of Hormuz and the Red Sea.
According to the CBO's estimates, higher energy prices will exert additional pressure on consumer prices. The agency predicts that inflation rates in the Personal Consumption Expenditures (PCE) price index will be 0.5% higher than previous forecasts in the first quarter of 2027.
The CBO report also notes that its estimates are subject to "significant uncertainty" due to the Department of Defense's lack of response to information requests. This assessment comes at a time of increased instability across the Middle East, with the conflict having significant impacts on military operations, energy supply, and maritime routes.
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