Iran War Cost Each US Household Nearly US$2,000

The Iran war has cost the average US household nearly US$2,000, and renewed US strikes could keep that bill rising as winter heating demand approaches, Fortune reported on Thursday (Nov 5), citing economists and Pentagon data.

The household estimate comes from Mark Zandi, chief economist at Moody’s Analytics, as reported by CNN on Oct 13. About US$1,100 of the total reflects higher energy and transportation costs, with higher interest rates and a share of military spending making up the rest. Zandi wrote on X on Oct 12 that the cost adds up to US$265 billion nationwide.

Iran War – Military spending climbs

US military spending on the war has passed US$47 billion, according to Pentagon data reported by Reuters on Oct 27, up from the US$37.5 billion that Defense Secretary Pete Hegseth estimated in July. More than US$29 billion of that goes to replacing expended munitions.

US and Israeli strikes on Iran began on Feb 28, according to the Congressional Research Service (CRS). Iran retaliated across the Middle East, including against a pumping station on Saudi Arabia’s East-West pipeline, and used attacks on commercial shipping to assert control over the Strait of Hormuz, which carried about 20 million barrels of oil a day before the war.

A ceasefire in April was followed by a memorandum of understanding on June 17, but the agreement collapsed within weeks and formally expired in August. By September, the CRS described the conflict as a war of attrition.

Oil rally at risk

Brent crude fell more than 9 per cent on Wednesday (Nov 4) as traders bet that the midterm election results would push the White House towards a deal, Fortune said, citing CNBC. Democrats won control of both the House and the Senate in the Nov 3 vote.

However, US forces struck Iran’s Qeshm Island on Nov 2. US officials told CNN the attack was a defensive response to Iranian surface-to-air missiles fired at US assets, while officials told ABC News that limited “defensive strikes” had been carried out in recent weeks without publicity. President Donald Trump has said he has no immediate plans to strike Iran, Fortune reported.

Gilbert Metcalf, a visiting professor at MIT Sloan School of Management and former US Treasury deputy assistant secretary for environment and energy, said the strikes raise the odds of Iranian attacks on Hormuz shipping or on regional oil and gas infrastructure. “Oil prices will remain persistently high in the face of these risks,” he told Fortune, adding that this is especially concerning for winter home heating.

Metcalf also said Saudi Arabia’s plan to send 10 million barrels a day around Hormuz may barely move prices.

What’s next

Mediators were awaiting US and Iranian responses to their latest proposal as of Nov 2, according to CNN. Metcalf warned that the market’s relief rally may prove short-sighted if Trump decides to increase military pressure on Iran now that the election is over.

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