US war in Iran costs $29 billion to date, Pentagon tells Congress

Pentagon officials told lawmakers on May 12, 2026 that U.S. military operations related to the Iran conflict have cost approximately $29 billion so far. The update came during budget hearings where Defense Secretary Pete Hegseth and other senior leaders faced questions on operational readiness and war-related expenditures, and it revised an earlier public estimate of $25 billion.

According to the department’s comptroller team, roughly $24 billion of the total reflects the cost of replacing expended munitions, repairing damaged equipment and vessels, and other maintenance-related outlays. The remaining sum covers operational costs to sustain forces in theater. Comptroller Jules “Jay” Hurst said the figures are under continual review by joint staff and comptroller teams, noting that some categories—such as broader base reconstruction—were not included in the public estimate.

The increase in direct defense spending has immediate market implications, particularly for energy markets and inflation expectations. Disruptions around strategic shipping routes and heightened geopolitical risk have pressured oil and gasoline prices higher, feeding into headline inflation and consumer energy costs in the United States. Lawmakers pressed Pentagon leaders on the domestic economic impact as higher fuel prices weigh on households and political sentiment.

From a fiscal policy standpoint, the Pentagon’s updated war-cost disclosure will shape supplemental funding requests and the broader 2027 defense budget debate. Additional appropriations for munitions replenishment and industrial base ramp-up could amplify fiscal pressures, raising questions about deficit financing and resource allocation across domestic and defense priorities. Defense contractors and suppliers may see increased demand as production is accelerated to rebuild inventories.

Analysts caution that public Pentagon tallies may understate the full economic bill, since liability for damaged allied infrastructure, long-term occupational costs or wider economic spillovers are often recorded separately or later. Markets will watch forthcoming supplemental requests, congressional responses and central bank commentary on inflation to assess how fiscal and monetary policy are likely to respond to sustained war-related price pressures. Investors may reprice risk in energy and defense sectors as new budget details emerge.