The Cost of War

US Military Spending

• First 100 hours: $3.7 billion ($891 million/day) — Center for Strategic and International Studies (CSIS)
• First 6 days: $11.3 billion — Pentagon
• Pentagon budget request: $200+ billion — with no defined end date (AP)
• Defense Secretary Hegseth: No "timeframe" for the war's conclusion — "takes money to kill bad guys" (CNBC)

Energy Markets

Oil

• Brent crude: $112.57/barrel close (Day 28, Mar 27) — highest since 2022. WTI closed at $99.64 (+5.46%). Surged after Israel struck two nuclear facilities (Yazd yellowcake, Arak heavy water reactor) and steel plants despite Trump's 10-day energy pause. IRGC formally closed Hormuz. Iran vowed "heavy" retaliation. ~3,000 ships waiting at Strait (S&P Global). Bloomberg: traffic "remains largely halted" despite Iran's toll system. (CNBC, NYT)
• First Hormuz transit: Thai company Bangchak confirmed first known tanker transit under Iran's "non-hostile" ship policy — crossing Indian Ocean with crude due in Thailand early April (Guardian)
• Previous peak: $113.44 in early Monday trading (Reuters) before Trump's postponement announcement
• 30-day volatility: Both Brent and WTI at highest levels since April 2022 (Reuters)
• WTI crude: ~$87/barrel (Mar 25) — still up ~30% from $67.02 pre-war
• Goldman Sachs: Raised 2026 Brent average forecast by $8 to $85/barrel — implying prices expected to come down from current levels but remain elevated for the year
• Brent weekly gain: +8.8% for the week ending Mar 21 — highest since July 2022
• Middle East premiums: Asian benchmark crudes hit records near $164/barrel due to proximity to disruption (Reuters)
• Total supply lost: ~400 million barrels removed from market (~4 days of global supply), triggering ~50% price increase (Reuters)
• WTI-Brent spread: Widest in 11 years as of Mar 19 (Reuters)
• Goldman Sachs: Oil may stay in triple digits for years; traders demanding ~$14/barrel risk premium (CNN)
• Strait of Hormuz: 20% of world's oil passes through — effectively disrupted since Day 1. Iran controlling passage selectively; 7-10M bpd estimated lost (Dallas Fed)
• Kharg Island: Iran's main oil export hub struck by US on Day 14 — Trump claimed it was "totally demolished"
• IEA assessment: Executive Director Fatih Birol says this is the worst energy crisis since the 1970s — worse than 1973 and 1979 oil shocks combined

Natural Gas

• Qatar's Ras Laffan: 17% of LNG output cut for up to 5 years after Israeli strike on South Pars gas field (Day 20) (Al Jazeera)
• Losses: ~$20 billion/year in damage; Qatar's GDP could sink 13% in 2026 (Reuters/Capital Economics)
• European gas prices: Doubled since war began; EU urging member states to begin winter gas stockpiling (The Guardian)
• Qatar supplies 20% of global LNG — force majeure likely on contracts to Belgium, Italy, South Korea, China (BBC)
• Fertilizer costs: Rising sharply as petroleum byproduct, threatening global food price spikes (The Guardian)

Fuel Prices Worldwide

• US national average: Approaching $4/gallon (up from ~$3 pre-war); diesel exceeded $5/gallon nationally (CNBC)
• California: Regular $5.70, diesel $6.77/gallon as of Mar 21
• US gasoline spending: Up 14%+ year-over-year in second week of March (Bank of America Institute)
• Peak forecast: Gas could hit $4.36/gallon by May (Goldman Sachs/Stanford SIEPR via PBS)
• Zimbabwe: Fuel topped $2/litre for the first time — direct result of conflict
• UK and Europe: Sharp increases across the board; Shell warns Europe could face fuel shortage by April; BASF raising prices (The Guardian)
• Egypt: Costs of distant war driving up local market prices (AP)

Trade and Shipping

Strait of Hormuz

• Traffic collapse: Down from 130+ vessels/day pre-war to ~3-4 vessels/day average; just under 100 ships total since Mar 1 (BBC Verify)
• 150+ ships anchored outside strait to avoid risks
• Iran's selective policy: Allowing some non-Western commercial ships through (China, Japan, India, Pakistan); 20+ commercial vessels struck
• Trump ultimatum (Day 23): 48-hour deadline to fully reopen Hormuz or US will "obliterate" Iranian power plants — postponed 5 days on Day 24, then extended another 10 days on Day 27 (to ~April 5-6) citing "talks are ongoing" through Pakistan back-channel (NYT). Iran formally rejected the 15-point plan on Day 27.
• Iran's counter-threat: IRGC says Hormuz will be "completely closed" permanently if power plants are attacked; Iran's Defense Council says "non-belligerent" countries can transit with coordination
• Panama Canal: Operating at maximum capacity (36-38 vessels/day) due to surging LNG tanker demand as Gulf routes become untenable
• Red Sea also affected — Houthis signaling possible entry into war, threatening Bab el-Mandeb strait

Aviation

• Dubai International Airport: Damaged by drone strikes on Day 2 — one of the world's busiest airports temporarily halted all flights (Reuters)
• Middle East flights: Near-complete stop from Day 1, stranding hundreds of thousands
• Qatar Hamad Airport: Partially resumed via "emergency routes" by Day 7
• Qatar Airways operating special repatriation flights to European cities

Country-Level Impacts

Oil Producers

• Kuwait: Began cutting oil production — ran out of storage room (WSJ via Reuters, Day 8)
• Russia: "Significant increase in demand" for Russian energy — profiting from disruption. But Lukoil reported $12.4 billion net loss in 2025
• Iraq: Overtook Russia as India's top oil supplier
• Serbia: Cutting crude oil excise duties by 60% to calm markets

Importers and Allies

• Japan: Stockpiling US oil domestically — PM Takaichi announced during White House visit
• Italy: Seeking gas from US, Azerbaijan, Algeria after Qatari exports halted
• India: Given 30-day US sanctions waiver on oil imports
• European Council: Urgently called for moratorium on strikes against energy and water facilities

US Responses

• Sanctions pause (Mar 20): Trump admin paused some Iranian oil sanctions to get more supply to market
• Treasury Secretary Bessent: Claims "50 days of temporary elevated prices" is worth "50 years of peace" — acknowledged he cannot estimate when prices normalize
• Strategic reserves: Government could release more oil from reserves
• Trump: Ordered weapons manufacturers to "quadruple" production
• Iran floating storage: Iran's oil ministry says it "essentially has no crude oil left in floating storage"

Humanitarian Economic Costs

• Iran: 10,000+ residential homes damaged or destroyed (Tehran governor, Day 16). Infrastructure, factories, and civilian areas hit alongside military targets
• Lebanon: 1,000,000+ displaced — massive economic burden on a country already in economic crisis
• Gulf states: Billions in damage to energy infrastructure, airports, and military facilities
• Qatar GDP: Estimated 9% annual hit from Ras Laffan damage alone (JPMorgan)
• Global food supply: Al Jazeera's "Counting the Cost" asks: Could Iran war trigger next global food shock?
• Pharmaceutical supply chains: Potential disruptions flagged by Think Global Health

Global Macroeconomic Impact

• Barclays estimate: If oil averages $100 in 2026, global growth drops 0.2pp to 2.8%; headline inflation rises 0.7pp to 3.8% (The Guardian)
• Gulf infrastructure damage: Iranian retaliatory strikes hit ports and refineries in Saudi Arabia, Kuwait, Bahrain, UAE, and Qatar; $800 million in damage to US bases alone (CSIS/BBC)
• Desalination threat: Atlantic Council warns large-scale damage to Gulf desalination plants could make some cities uninhabitable within weeks
• Australia's ASX 200: Down 10% since war began — full market correction; plunged 1.8% at Monday open ($60 billion wiped) (AFR)
• China/HK stocks: Worst day in nearly a year on stagflation fears (Al Jazeera)
• UK: PM Starmer called emergency economic meeting (Al Jazeera)
• India: PM Modi compares economic impact to COVID-19, says war straining energy security (Economic Times)
• Fuel conservation: Some countries implementing 4-day work weeks to reduce energy consumption (NYT)
• War cost through Mar 16: Nearly $1 billion a day — $12 billion spent; Pentagon requesting $200+ billion supplemental (Forbes)

The Bottom Line

The IEA has declared this the worst energy crisis since the 1970s — worse than the 1973 and 1979 oil shocks combined. The simultaneous disruption of the Strait of Hormuz, direct strikes on oil and gas infrastructure on both sides, and extreme market volatility have created cascading effects across every sector of the global economy.

The war has cost the US $12 billion through Day 17, with a $200+ billion budget request on the table. Brent crude has been whipsawing between $99–$114, closing at $112.57 on Day 28 — the highest since 2022 — after Israel struck nuclear facilities despite Trump's energy pause extension. Goldman Sachs has raised its 2026 average Brent forecast to $85/barrel, implying prices will eventually come down but remain elevated all year. India's PM Modi has compared the economic impact to COVID-19. Trump has extended the Hormuz deadline to April 6, but Israel's nuclear facility strikes — which Iran says violate the pause — have undercut any diplomatic momentum. ~3,000 ships are now waiting at Hormuz (S&P Global), and Iran is formalizing a "toll booth" regime for the Strait.