$1 Billion a Day: The True Cost of the Israel–US War on Iran

In June 2025, a sudden escalation of tensions between Israel and Iran erupted into a 12-day conflict, drawing the United States into a volatile Middle East crisis. As a fragile ceasefire holds, the financial toll on Israel, the US, Iran, and the global economy demands scrutiny.

The Conflict Timeline: A 12-Day Firestorm

The conflict began on June 13, 2025, when Israel launched surprise airstrikes on Iranian military and nuclear facilities, targeting key infrastructure and leadership. Iran retaliated with ballistic missile attacks on Israeli cities, causing significant damage. On June 21, 2025, the United States entered the fray, conducting Operation Midnight Hammer, striking three Iranian nuclear sites. After 12 days of intense fighting, a ceasefire was announced on June 23, 2025, though violations have raised doubts about its stability. As of June 25, 2025, the region remains on edge.

Costs for Israel: A Heavy Financial Burden

Israel’s engagement in the conflict has come at a steep price, encompassing military operations, infrastructure repair, and economic disruptions.

Military Expenditures

Israel’s military spending has been staggering. According to Brig. Gen. (res.) Re’em Aminach, a former senior defense official, direct military expenses averaged $725 million per day. Over 12 days, this amounts to approximately $8.7 billion. These costs include:

• Offensive Operations: Airstrikes on Iranian targets, costing around $593 million in the first two days alone, covering flight hours and munitions.

• Defensive Measures: Deployment of missile defense systems like Iron Dome, David’s Sling, and Arrow, alongside reserve mobilization.

The Aaron Institute for Economic Policy estimates that a month-long war could cost $12 billion, suggesting that prolonged conflict would further strain Israel’s finances.

Defense Systems Costs

Israel’s multilayered missile defense systems have been critical in intercepting Iranian missiles, but they are costly:

• Iron Dome: Each interceptor costs $50,000–$100,000.

• David’s Sling: Interceptors range from $700,000 to $1 million.

• Arrow 2 and 3: Costs range from $3 million to $4 million per interception.

With Iran launching over 400 missiles, the cost of interceptions alone could reach $200 million daily, contributing significantly to the military expenditure.

Infrastructure Damage

Iranian missile strikes have inflicted considerable damage on Israeli infrastructure. The Tax Authority projects claims for damages at NIS 5 billion (approximately $1.4 billion, assuming 3.5 NIS per USD). Affected areas include:

• Residential buildings in Tel Aviv, Beer Sheva, and Ramat Gan.

• Public facilities, such as the Soroka Medical Center in southern Israel.

This figure represents initial claims and may rise as assessments continue.

Business Shutdown and Economic Losses

The conflict has disrupted Israel’s economy through restrictions on gatherings and closures of non-essential workplaces. The Finance Ministry lowered its 2025 GDP growth forecast from 4.3% to 3.6%, reflecting the economic strain. Key impacts include:

• Labor Shortages: Reservist call-ups have removed workers from their jobs, exacerbating labor shortages.

• Business Closures: Non-essential businesses, schools, and public services have been shuttered, leading to significant economic losses.

• Aviation Disruptions: Ben Gurion International Airport operated with limited capacity, stranding thousands and disrupting commerce.

While precise figures for daily economic losses are unavailable, Israel’s daily GDP is approximately $1.5 billion (based on a $550 billion annual GDP). Assuming a 50% reduction in economic activity due to restrictions, daily losses could be in the range of $750 million, though this is an estimate.

Human Costs

The human toll in Israel includes 24 deaths and 685 hospitalizations, with 643 injuries classified as light. These losses, while not directly financial, contribute to the societal and economic burden.

Costs for the United States: A Targeted Intervention

The US’s involvement has been limited but costly, primarily through a single high-profile operation.

Operation Midnight Hammer

On June 21, 2025, the US executed Operation Midnight Hammer, targeting Iran’s Fordow, Natanz, and Isfahan nuclear sites. The operation’s estimated cost is $174 million, broken down as follows:

• Munitions:

  • 14 GBU-57 Massive Ordnance Penetrator bombs at $5 million each: $70 million.

  • 30 Tomahawk missiles at $2 million each: $60 million.

• Flight Hours: Seven B-2 stealth bombers flew a 37-hour mission, costing $170,000 per hour, totaling $44 million.

This figure excludes costs for support aircraft, personnel, and logistics, which could increase the total.

Potential Ongoing Costs

If the conflict escalates, the US could face additional expenses for:

• Further military operations or deployments.

• Support to Israel, which has already received $12 billion in arms sales under the Trump administration (State Department).

• Regional security measures, such as protecting US bases.

However, current data limits projections beyond the initial strike.

Costs for Iran: A Devastating Blow

Iran’s financial losses are significant but less documented due to limited transparency and ongoing assessments.

Damage to Nuclear and Military Infrastructure

Israeli and US strikes targeted Iran’s nuclear facilities at Fordow, Natanz, and Isfahan, as well as military bases and energy infrastructure (Wikipedia). Key damages include:

• Nuclear Facilities: Strikes caused significant damage to centrifuge production sites and enrichment plants, though the extent varies. Rebuilding costs could be in the billions, as a comparable US enrichment plant cost $2.3 billion in 2007.

• Energy Sector: Attacks on the South Pars gasfield and Shahr Rey refinery disrupted production, with unknown repair costs.

• Military Infrastructure: Over 120 air defense systems and missile launchers were destroyed, further weakening Iran’s capabilities.

The total cost to rebuild is likely in the billions, compounded by economic sanctions.

Military Expenditures

Iran launched over 400 ballistic missiles at Israel, with unit costs ranging from $110,000 (Fateh-110) to $8 million.. Assuming an average cost of $2 million per missile, the total cost is approximately $800 million. Additional expenses include:

• Defense operations against Israeli and US strikes.

• Maintenance of remaining missile stockpiles, estimated at 2,000 before the conflict.

Iran’s planned tripling of its military budget to $30.9 billion in 2025 reflects the need to replenish resources.

Human Costs

Iranian authorities report over 400 deaths, mostly civilians, and significant injuries. These losses exacerbate economic challenges through reduced workforce capacity and increased healthcare costs.

Costs for the West: Broader Implications

While direct costs for Western nations beyond the US are minimal, the conflict has indirect economic impacts:

• Oil Price Volatility: Prices spiked 10% to $78.50 per barrel but later dropped 7% to $68.51 after the ceasefire. Continued instability could drive inflation.

• Regional Economic Fallout: The IMF revised the Middle East’s 2025 growth forecast from 4% to 2.6%, potentially costing Gulf economies $730 billion to $1 trillion.

• European Markets: European stocks dipped initially but stabilized, with rising US Treasury yields reflecting inflation fears.

Global Economic Implications

The conflict’s most significant global impact is on energy markets. The Strait of Hormuz, a critical chokepoint for 20% of global oil, faces closure risks, which could skyrocket prices and disrupt supply chains. Other effects include:

• Inflation Risks: Higher energy costs could fuel global inflation, impacting consumers and businesses.

• Market Volatility: Gold and the US dollar rose as safe-haven assets, while equity markets stabilized after initial declines.

• Geopolitical Tensions: The conflict has strained US relations with allies and raised concerns about broader regional escalation.

The 12-day Israel-US war against Iran has imposed staggering costs. Israel faces over $10 billion in military, infrastructure, and economic losses, with daily expenses exceeding $1 billion. The US spent $174 million on a single operation, with potential for more if tensions persist. Iran’s damages likely reach billions, with missile launches costing hundreds of millions. The global economy grapples with oil price volatility and supply risks, threatening stability. As the ceasefire teeters, the full economic impact remains uncertain, but the financial scars of this conflict will linger for years.

Key Data Table