Economic Costs of U.S.-Iran War Continue to Rise as Oil and Gas Prices Climb

WASHINGTON — The economic costs associated with the ongoing U.S.-Iran war continue to grow as Americans face higher energy prices and the federal government spends billions of dollars on military operations.

President Donald Trump defended the conflict Wednesday while speaking at the Republican National Committee’s midterm convention in Dallas, arguing that preventing Iran from obtaining a nuclear weapon justifies the costs Americans are experiencing.

Trump also said the war would end “immediately after” the midterm elections. However, no agreement ending the conflict has been announced.

Energy markets have experienced significant volatility as the conflict continues to affect oil shipments and raise concerns about global supply.

On Thursday, Brent crude oil briefly climbed above $108 per barrel, reaching its highest level since May, according to the Associated Press.

American drivers are also paying significantly more at the pump.

AAA reported that the national average price for a gallon of regular gasoline reached approximately $4.28 on Sept. 10. Continued instability involving Iran and the Strait of Hormuz has contributed to volatility in global oil markets.

The economic impact extends beyond gasoline.

Mark Zandi, chief economist at Moody’s Analytics, estimated that the conflict had effectively cost the average American household approximately $1,650 as of early September, according to reporting by POLITICO.

Zandi’s estimate includes higher energy expenses, increased borrowing costs and the financial cost of U.S. military operations.

That $1,650 figure is an economist’s estimate rather than an amount directly charged to individual households, and the impact can vary significantly depending on factors including fuel use, borrowing and household income.

Direct federal military costs have also increased.

Defense Secretary Pete Hegseth told the Senate Appropriations Committee in July that the war had cost approximately $37.5 billion at that point.

Hegseth and other Pentagon officials also sought tens of billions of dollars in additional funding for military operations and other defense expenses.

The Trump administration has maintained that its military operations are intended to prevent Iran from obtaining a nuclear weapon and protect U.S. interests and shipping routes in the region.

The administration has also said it expects energy prices to decline as conditions surrounding the Strait of Hormuz improve.

However, continued fighting and instability affecting major oil transportation routes have kept pressure on global energy markets.

Higher oil prices can affect consumers beyond the gas pump because transportation and energy expenses influence the cost of moving and producing goods throughout the economy.

The conflict and its economic consequences remain subjects of debate in Washington as lawmakers consider additional military funding and question the administration about the duration, objectives and financial cost of U.S. operations.

NCN will continue monitoring developments in the U.S.-Iran conflict, including military spending, energy prices and their impact on American households.