Tehran's latest salvo in a deepening economic conflict with the U.S. places the direct cost of the two-month war at $100 billion, a figure that could pressure American fiscal policy as energy markets tighten.
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Iran claims US war cost hits $100 billion amid rising oil prices
Iran's Foreign Minister Araghchi claimed on May 1 that the ongoing conflict has cost the U.S. $100 billion, accusing the Pentagon of deliberately understating the financial toll of a war that has already sent oil prices above $100 a barrel and roiled global markets.
"Israel's gamble has so far directly cost the United States $100 billion, four times the previously announced amount," Araghchi said in a statement, adding that indirect costs for American households are "much higher."
The statement comes as diplomatic talks to end the two-month war stall, pushing Brent crude futures up nearly two percent to $107.49 a barrel. The U.S. dollar has also advanced on safe-haven flows, with the dollar index at 98.623. The conflict's economic impact is spreading, with both Visa and Mastercard reporting a downturn in travel-related spending that has affected quarterly earnings.
The escalating war of words puts a new focus on the conflict's true economic burden, which now extends from direct military expenditure to corporate earnings and household costs. With the pivotal Strait of Hormuz, which handles a fifth of global oil shipments, effectively closed, the risk of a more severe stagflationary shock to the global economy grows, a scenario reminiscent of the 1970s oil crisis.
Tehran's claim, which could not be independently verified, follows a series of escalating financial measures by Washington. U.S. authorities recently froze $344 million in the Tether stablecoin linked to Iranian entities, part of a broader push to cut off financial channels supporting Tehran. "We will follow the money that Tehran is desperately attempting to move outside of the country," Treasury Secretary Scott Bessent said in a statement on Friday.
The conflict, which began with U.S.-Israeli strikes on Iran on February 28, has already had a tangible impact on global commerce. Mastercard's Chief Financial Officer Sachin Mehra told analysts the company assumes the conflict will wind down by the second quarter, though CEO Michael Miebach noted the company "will adjust as needed" if pressures don't ebb.
"I have been surprised that the markets are so confident, perhaps even blase, about progress in talks and the prospect of a peace deal," said Kyle Rodda, a senior financial analyst at Capital.com. "The peace might not hold and if it doesn’t the markets will have to re-price quite violently."
This article is for informational purposes only and does not constitute investment advice.
[1] Iranian Foreign Minister: US war on Iran has cost the United States $100 billion[2] US Dollar Index (DXY) holds gains near 99.00 as geopolitical tensions grow | FXStreet[3] Visa, Mastercard cite travel slowdown impact[4] US Officials Freeze $344 Million in Tether’s USDT Linked to Iran[5] Dollar advances as US-Iran talks suffer setback By Reuters
