The U.S. Congressional Budget Office reports that the conflict with Iran has cost the Defense Department $38 billion as of August 2026. Monthly spending remains high at $2 billion to $3 billion, with analysts warning of sustained inflation risks and energy supply pressures through early 2027.
The U.S. Congressional Budget Office (CBO) has officially reported that the ongoing military conflict with Iran has cost the U.S. Department of Defense approximately $38 billion as of August 1, 2026. This financial burden is expected to continue, with monthly spending estimated between $2 billion and $3 billion, depending on the intensity of the fighting. For global markets, this update highlights the long-term economic and strategic costs of the conflict.
A significant portion of this spending, totaling roughly $21.7 billion, has been directed toward replacing depleted military equipment and missiles. The CBO report points to a notable supply chain challenge: the U.S. has utilized a substantial share of its air-defense interceptors since June 2025. Because these systems are complex, replacing the current inventory to previous levels is expected to take at least five years. This potential shortage could impact U.S. military readiness and its ability to respond to other global strategic requirements.
For investors, the CBO’s warning regarding U.S. inflation is a critical point to track. The agency projects that the conflict will likely keep U.S. inflation 0.5 percentage points higher through the first quarter of 2027. This inflationary pressure is largely linked to the risk of volatility in oil and natural gas prices, as the Strait of Hormuz remains a central transit route for global energy supplies. Any disruption in this region directly influences global energy costs, which can affect central bank policies and market sentiment worldwide.
The ongoing conflict is now a primary factor in U.S. federal fiscal planning. Investors should continue to monitor how these sustained, high military costs affect government budget stability. Additionally, any new developments regarding shipping routes in the Middle East will remain a key factor for global energy pricing and supply chain stability in the coming months.