By Agha Iqrar Haroon
The ongoing US–Israel war against Iran is rapidly emerging as the most economically burdensome conflict in the modern history of the Middle East.
The moral and strategic cost of the US–Israel attack on Iran is now proving to be far heavier than anticipated, particularly for the United States, as the era of aircraft carriers seems to be drawing to a close. The USS Abraham Lincoln, the Navy’s flagship, is reportedly limping out of the Persian Gulf, a stunning demonstration of vulnerability in the heart of American naval power.
According to the reports, Iran’s military ingenuity has fundamentally challenged long-held assumptions about the invincibility of aircraft carriers. Once considered “floating fortresses,” these massive vessels are increasingly being seen as expensive, highly visible targets rather than decisive tools of power projection. This is surely a national trauma, for US highlighting that a $13-billion asset could be neutralized in mere minutes—a blow to both material strength and national pride.
The political and psychological ramifications have been immediate. European media noted that the return of the USS Abraham Lincoln in such a debilitated state represents the most significant setback to American military prestige since the Vietnam War. Russian news agency Sputnik went even further, declaring, “The legend is dead; Abraham Lincoln arrived to threaten, but is returning as a floating pile of scrap,” framing the episode as a symbolic humiliation for the United States on the global stage. The incident has triggered waves of alarm within the Pentagon, describing it as a “panic moment” among senior officials. Analysts suggest that the withdrawal of the USS Abraham Lincoln not only exposes a critical vulnerability in U.S. naval strategy but also signals a decisive shift in the regional balance of power. With the United States’ flagship effectively neutralized, the strategic leverage long assumed by Washington over West Asia has weakened dramatically, leaving U.S. allies in a state of disquiet.
The British media framed the event in historical terms, writing that this defeat will go down as “the moment Western naval dominance collapsed.” Regional experts point out that Iran’s success in neutralizing such a high-profile target is likely to embolden other regional powers to challenge American influence, fundamentally reshaping military calculations and alliance structures across the Middle East.
The combination of technological demonstration, strategic shock, and diplomatic reverberation underscores a new reality: aircraft carriers may no longer guarantee supremacy, and the United States, for the first time in decades, faces the tangible risk that its most iconic military instruments are vulnerable to asymmetric threats. Analysts across Reuters, CNN, Sputnik, AFP, and the Telegraph agree that this episode could mark the beginning of a post-carrier era in naval warfare, with implications not only for the U.S. Navy but for the global balance of power as a whole. The US–Israel war with Iran is not merely another Middle Eastern confrontation. It represents a critical geopolitical crossroads where military strategy, economic sustainability and diplomatic cohesion intersect.
For Washington, the conflict threatens to evolve into the most expensive war ever fought in the region. For Iran, the challenge lies in sustaining prolonged resistance despite severe economic constraints. For Europe, the crisis exposes deep political divisions and strategic uncertainty. And for the Gulf states, the overriding priority remains avoiding a conflict that could devastate the fragile stability of the region.
Ultimately, the unfolding war highlights a sobering truth of modern warfare: military superiority does not always guarantee economic sustainability or diplomatic unity.
As global oil markets tremble, alliances strain and regional tensions intensify, the central question is no longer whether this war will reshape the Middle East. The real question is how far its consequences will extend across the global order.
Beyond the battlefield, it is exposing deep diplomatic fractures among Western allies and revealing the strategic caution of regional powers. Unlike earlier wars in the region, this confrontation is not only altering military dynamics but also reshaping the broader strategic, economic and diplomatic architecture of the global order. It is pertinent to mention for readers that the data in this report is from open-source information, published articles and AI estimations.
Two defining characteristics have already become evident: the unprecedented financial cost of the war and the visible hesitation among America’s traditional allies to fully embrace the conflict.
The daily financial burden of the conflict for the United States depends on its scale and duration. Estimates from defense analyses and war-gaming studies conducted by institutions such as the Center for Strategic and International Studies (CSIS), RAND Corporation, and the U.S. Congressional Budget Office suggest that the costs can escalate rapidly.
In a limited air and naval campaign, where operations are largely confined to airstrikes against public buildings such as schools, nuclear facilities, missile installations and naval confrontations in the Persian Gulf, the estimated cost ranges between $300 million and $800 million per day. These expenses arise from the deployment of aircraft carrier strike groups, the extensive use of Tomahawk cruise missiles, each costing approximately $1.5 to $2 million and continuous sorties by advanced aircraft such as the F-35, F-22, B-2 and B-52 bombers. In addition, intelligence operations, surveillance missions and large-scale logistical support across the region contribute significantly to the overall cost.
However, as the conflict is escalating into a large regional war, comparable in scale to the 2003 invasion of Iraq, the financial burden would rise dramatically to $1 billion to $2.5 billion per day.
Such a scenario would likely involve the deployment of 150,000 to 250,000 American troops, multiple aircraft carrier strike groups and submarines, a sustained large-scale air campaign, and missile defense systems tasked with protecting American bases in the Gulf and Israeli territory because till now Iran is hitting US bases without any technical problems. Extensive logistical operations across numerous U.S. bases in the Middle East would further inflate the cost.
A major long-war scenario in which the conflict spreads across proxy battlefields in Iraq, Syria and the Gulf maritime routes, the cost could push daily to $2–3 billion. Historical comparisons highlight the magnitude of this financial commitment. At its peak, the Iraq War cost roughly $700 million per day, while the war in Afghanistan averaged around $300 million per day. A prolonged war with Iran could ultimately surpass $1–2 trillion in total costs if it continues for several years.
Beyond direct military spending, the economic consequences could extend far deeper. A disruption in the Strait of Hormuz is already destabilizing global oil markets. Missile attacks on Gulf energy infrastructure and Israeli cities are triggering broader regional escalation, while global economic stability has shaken by sudden energy supply shocks.
In stark contrast, Iran’s wartime expenditure would likely remain significantly lower. Tehran’s military doctrine is built around asymmetric warfare, designed specifically to counter the technological and financial superiority of the United States.
Iran’s total annual military budget is estimated at $15–25 billion, which translates to approximately $40–70 million per day during peacetime. In a limited conflict scenario, where Iran relies primarily on ballistic and cruise missiles, drone operations, naval swarm tactics in the Persian Gulf and proxy groups such as Hezbollah, Iraqi militias, Syrian factions and the Houthis, the estimated cost could range between $50 million and $150 million per day.
If the conflict expand into a sustained regional war, involving heavier missile barrages, extensive drone campaigns and wider mobilization of the Islamic Revolutionary Guard Corps (IRGC), Iran’s daily costs could rise to $150 million to $300 million.
Even in a full national mobilization scenario, where hundreds of thousands of Basij militia members are activated alongside sustained missile operations and nationwide logistical support, Iran’s daily war expenditure would likely remain within $300–500 million.
This disparity highlights the strategic logic behind Iran’s approach: cost asymmetry. Iranian ballistic missiles can cost anywhere between $100,000 and $1 million, while American interceptor missiles used to stop them can cost $3 million to $15 million each. Many Iranian drones are even cheaper, costing between $20,000 and $200,000. This imbalance allows Iran to impose disproportionate financial strain on its adversaries.
While the United States could be spending $1–3 billion daily, Iran’s war expenses might remain between $50 million and $300 million. Nevertheless, Iran’s weaker and sanction-stricken economy means that even $150–200 million per day could quickly place severe pressure on its national finances.
While the military confrontation intensifies, Europe’s diplomatic response has remained fragmented and cautious.
European Council President Antonio Costa recently argued that the primary beneficiary of the war is Russia, as rising energy prices and shifting geopolitical attention weaken Western focus on Ukraine. With the disruptions in shipping through the Strait of Hormuz have pushed global fuel prices sharply upward.
Costa bluntly stated that, “so far, there is only one winner in this war – Russia.”
According to him, Moscow benefits in multiple ways. Higher energy prices generate additional revenue for Russia’s war effort in Ukraine. Western military resources are diverted away from the Ukrainian front toward the Middle East. At the same time, global media and diplomatic attention shift away from the Ukrainian battlefield.
Costa also emphasized that international law must guide global responses, arguing that human rights and freedom cannot ultimately be achieved through bombing campaigns alone.
Across Europe, however, the response remains deeply divided.
The United States has pressed its allies to support the war effort, urging European partners to stand alongside Washington and Israel in confronting what it describes as the “rogue Iranian regime.” Yet European governments have taken markedly different positions.
Britain permitted the use of two military bases but rejected any attempt to impose regime change through military force. Germany aligned more closely with Washington by allowing operations from Ramstein Air Base. France permitted American aircraft to land but imposed strict conditions preventing their use in offensive strikes against Iran. Italy has explored providing air defense systems to Gulf states.
Spain has taken the strongest position against the conflict, refusing to grant the United States access to its bases.
Many European policymakers view the confrontation as “not our war,” preferring to concentrate their strategic attention on the continuing conflict between Russia and Ukraine.
Yet Europe cannot remain entirely insulated from the consequences. Escalation drives energy prices higher, increase security threats from potential Iranian retaliation, and destabilize European economies through disruptions in Gulf energy supplies.
Gulf States Seek to Avoid Direct War
While several Gulf countries have quietly allowed their territory or facilities to support American operations, they are carefully avoiding direct involvement in the conflict.
Regional analysts warn that the Gulf risks being drawn into a war that could undermine decades of economic planning and stability.
Recent Iranian missile strikes have already exposed vulnerabilities in the US-led missile defense architecture protecting Gulf infrastructure. Iranian attacks targeting early-warning radar systems and fire-control radars—key components of missile defense networks—have demonstrated how quickly these systems can be degraded.
Reports suggest that Iranian operations have targeted early-warning radar installations, fire-control radars guiding interceptor missiles and missile-defense batteries themselves.
By striking these elements sequentially, Tehran has created gaps in the defensive network.
This tactic again underscores the financial imbalance of missile defense warfare. Relatively cheap drones and missiles can force defenders to deploy interceptor missiles costing millions of dollars each, creating both financial and operational strain.
For Gulf states, particularly Saudi Arabia, this is a profound concern. Ambitious economic transformation programs such as Vision 2030 rely heavily on stability, secure energy infrastructure and uninterrupted industrial development.
Regional leaders fear that prolonged escalation could drain national resources, disrupt economic diversification projects and destabilize societies through sustained conflict.
Consequently, the Gulf Cooperation Council (GCC) continues to emphasize diplomacy and de-escalation, seeking to avoid direct confrontation between global powers on its soil.
Since the cost is so heavy for United States, there are fears that US or Israel can use Atomic Bomb to cease US-Israel war with Iran and there is nobody on earth that can stop them. Readers should remember how United States ended WWII.
Note: Data in this report is from open-source information, published articles and AI estimations.
References:
1. Policy Reports & Think Tank Studies
CSIS (Center for Strategic and International Studies)
• Anthony H. Cordesman, The U.S., Israel, and Iran: The Military Balance and Escalation Scenarios. CSIS.
• CSIS Missile Defense Project, Iran Missile Threat Assessment.
• CSIS, The Cost of U.S. Military Operations in the Middle East.
RAND Corporation
• RAND, War with Iran: Military Options and Consequences.
• RAND, The U.S.–Iran Military Balance and the Impact of Asymmetric Warfare.
• RAND Arroyo Center, Estimating the Cost of Major Military Operations.
Congressional Budget Office (CBO)
• CBO Report: Costs of Military Operations in Iraq and Afghanistan and Other Activities Related to the War on Terrorism.
• CBO, Long-Term Implications of Defense Spending.
International Institute for Strategic Studies (IISS)
• The Military Balance (annual publication)
• IISS Strategic Dossier: Iran’s Missile and Drone Capabilities.
Brookings Institution
• Kenneth Pollack, Unthinkable: Iran, the Bomb, and American Strategy.
• Brookings, If War Comes: Military Scenarios for a U.S.–Iran Conflict.
Stockholm International Peace Research Institute (SIPRI)
• SIPRI Military Expenditure Database
• SIPRI Reports on Middle East military spending trends.
Atlantic Council
• Atlantic Council Issue Brief: The Risk of War in the Persian Gulf.
• Atlantic Council, Iran’s Strategy of Asymmetric Warfare.
International Crisis Group (ICG)
• ICG Report: The Iran Crisis and the Risk of Regional War.
• ICG Middle East Briefings on Gulf tensions.
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2. Credible Media Sources
These outlets have published analyses and reporting on the economic and geopolitical implications of a U.S.–Iran war.
Reuters
• “Analysis: Strait of Hormuz tensions threaten global oil markets.”
• “How a conflict with Iran could cost the United States billions per week.”
Financial Times
• “The global economic consequences of a war with Iran.”
• “Oil markets and the Strait of Hormuz risk.”
BBC
• “What would a war between the US and Iran look like?”
• “Why the Strait of Hormuz matters to the global economy.”
The New York Times
• “The Price of War: The U.S. Military’s Costliest Conflicts.”
• “Iran’s missile and drone strategy against superior militaries.”
The Washington Post
• “How much would war with Iran cost?”
• “Iran’s asymmetric warfare strategy.”
Bloomberg
• “Oil prices surge amid Gulf tensions.”
• “Economic impact of Middle East conflict on global markets.”
The Guardian
• “European divisions over U.S. policy toward Iran.”
• “Gulf states seek to avoid regional war.”
Al Jazeera
• “Europe divided over Israel and Iran conflict.”
• “Why Gulf states fear escalation with Iran.”
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3. Energy Market and Strait of Hormuz Sources
U.S. Energy Information Administration (EIA)
• World Oil Transit Chokepoints: Strait of Hormuz.
International Energy Agency (IEA)
• Oil Market Report.
Oxford Institute for Energy Studies
• Research papers on Gulf energy security.
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4. Military Technology & Missile Defense Sources
Missile Defense Agency (MDA)
• Reports on interceptor missile costs.
CSIS Missile Defense Project
• Missile Threat: Iran.
IISS Strategic Comments
• Analysis of Iran’s missile and drone capabilities.
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5. European Policy Statements
For the section referencing European divisions:
European Council / EU Statements
• Antonio Costa remarks on Middle East conflict and Ukraine implications.
Politico Europe
• Coverage of EU divisions over Iran policy.
Euronews
• Reporting on European responses to Middle East escalation.
