Washington DC [US], September 16 (ANI): The ongoing US conflict with Iran in West Asia has cost the US Department of Defense (DoD) approximately USD 38 billion as of August 1, 2026, according to a recent report on the war by the Congressional Budget Office (CBO), which said the monthly cost could rise to USD 3 billion if the intensity of fighting increases to levels seen in July.
The CBO, a nonpartisan agency that provides budget and economic analysis for the US Congress, released its assessment in a report titled “Estimating the Cost of Combat Operations Against Iran”.
The agency examined four categories linked to the conflict: DoD’s operational, logistical and sustainment costs; opportunity costs; economic costs arising from disruptions and higher prices; and potential additional costs, including diplomatic operations and foreign aid.
Of the USD 38 billion estimated cost, CBO said a substantial portion reflects the expense of replacing expended munitions and equipment lost in battle, increased flying hours, other military operations and higher fuel costs.
The agency noted that the initial intense phase of the conflict lasted just over a month, while less intense combat operations have continued.
“As the conflict persists, DoD’s costs will continue to increase—slowly if the level of violence remains low and sporadic (as it did in May and June) and rapidly if the intensity of the conflict escalates (as it did in July),” the report said.
According to the agency, an additional month of conflict would cost about USD 2 billion if violence remained at the levels seen in May and June.
However, if the intensity increased to roughly the level experienced in July, the monthly cost would rise to USD 3 billion.
“Monthly costs could be higher still if the violence escalated further,” CBO added.
The CBO report further said that its estimate was based on government databases and public reports because the Department of Defense did not respond to its requests for information. The agency therefore cautioned that its estimates were subject to “considerable uncertainty”.
The assessment also pointed to the broader budgetary implications of the conflict.
CBO noted that the Administration had requested USD 87.6 billion in supplemental appropriations in June, including USD 67.1 billion for DoD.
The portion of the request that CBO said appeared to be directly related to the conflict, USD 42.3 billion, was about 10 per cent larger than its estimate of DoD’s costs.
Beyond direct military expenditure, CBO identified the large expenditure of missile defence interceptors as the main opportunity cost for DoD so far. It said this would leave the United States with a reduced inventory of interceptors for several years.
The conflict has also produced economic effects beyond military spending, particularly through disruptions to oil and natural gas shipments through the Strait of Hormuz and shipping through the Red Sea.
CBO said the disruptions had increased global energy prices and affected the prices of crude oil as well as refined petroleum products such as gasoline, diesel and jet fuel.
Higher energy prices are expected to put additional pressure on consumer prices, with CBO estimating that inflation in the personal consumption expenditures (PCE) price index in the first quarter of 2027 would be 0.5 percentage points higher than the agency’s February 2026 projection, while core PCE inflation would be 0.3 percentage points higher.
The agency also estimated that higher energy prices had added 2.3 percentage points to the annualised rate of overall PCE inflation in the second quarter of 2026, when PCE inflation stood at 5.3 per cent.
CBO said the higher inflation linked to the conflict would also put upward pressure on US Treasury interest rates. It estimated that three-month Treasury bill rates would be nearly 0.2 percentage points higher in 2026 than projected in February, while by the first half of 2027 they would be less than 0.1 percentage points higher than previously projected.
The CBO said it could not estimate potential additional costs associated with diplomatic operations and foreign aid, as such costs would depend on the outcome of the conflict and would be diffuse.
The assessment comes amid wider instability across West Asia, with the conflict affecting military operations, energy supplies and maritime shipping routes. CBO noted that disruptions to shipping through the Red Sea had also intensified since it completed the analysis underlying its assessment.
The agency also cautioned that its estimates for the different categories of costs were based on different data, methods, time periods and levels of uncertainty and therefore “are not directly comparable or summable.” (ANI)