The US & Israel war with Iran—Operation Epic Fury, which kicked off on February 28—has already dragged much of the region into an economic mess, and we're only two weeks in. Iran’s taken the brunt of the damage. Its military bases, energy infrastructure, and civilian neighbourhoods have been hammered.
War Impacts: Financial Chaos Unfolds Globally
If this war drags on, Iran’s GDP could shrink by more than 10%. The country faces billions in repair bills, and with vital export hubs like Kharg Island hit, oil revenues have dried up. US have already spent $11.3 billion on Iran war, and the costs keep rising.
US Is Feeling the Heat
US is also feeling the heat as the expenses go up due to the on-going conflict in Middle East. On the US side, the costs are staggering. It has incurred staggering military expenditures, with estimates ranging from $1 billion to $2 billion per day in operations. Just running the operation and replacing spent munitions—$5.6 billion in the first forty-eight hours—has pushed spending to well over $11.3 billion in two weeks. Some analysts think the total could land anywhere from $65 to $210 billion if fighting continues, and that’s before anyone even talks about long-term costs for veterans or the broader economic fallout.
Israel faces a different kind of economic pain. Its losses come from disruptions: weekly costs of $2.9 to $3 billion thanks to shutdowns, mobilization, and the fallout from strikes that sap both productivity and tourism.
War Fractures Gulf Economies
The Gulf countries aren’t spared either. As per the latest reports, Gulf loses $15bn in energy revenues since start of war. Oil production has nosedived—down 6.7 million barrels a day across the region. Airlines and tourism have taken a beating.
Indian Rupee Hits Record Low
India’s situation is especially dicey. On-going war puts $50bn in Indian remittances at risk. The country depends on the Strait of Hormuz for about half its crude imports, most of its LNG, and nearly all its LPG. With a blockade and Brent crude leaping from $70 to over $100—and sometimes close to $120—a year’s import bill has surged by $18-20 billion. Every $10 bump in oil prices widens India’s current account deficit by 0.3 to 0.5% of GDP and nudges inflation up by about a quarter percent. Iran war pummels India’s already turbulent aviation sector. More than 1,600 flights were canceled between 28 February and 3 March. Aviation consultants have now started weighing the cost of the conflict in the Middle East.
The Indian rupee pushes under pressure. And rupee has plunged to an all-time low as concerns rise over the impact of escalating oil prices. Mainly, critical fertilizer and chemical imports for agriculture are at risk. Fuel shortages or rationing steps are loom despite temporary buffers, hitting households and industry hard. For an economy already vulnerable to energy shocks, the situation is getting worse by the day.
