Iran War Costs U.S. $37.5 Billion as Pentagon Seeks Emergency Funding Amid Ongoing Conflict

U.S. Defense Secretary Pete Hegseth told Congress on Tuesday that the conflict involving Iran has cost an estimated $37.5 billion, including projected expenses through September 30, as the Pentagon sought additional emergency funding while lawmakers continued debating supplemental defense spending ahead of the November midterm elections.

Three developments are drawing market attention:

Funding gap remains in focus: President Donald Trump requested nearly $90 billion in supplemental funding last month, much of it related to the Iran conflict, while also proposing a $1.5 trillion Pentagon budget for fiscal year 2027. Hegseth said military training could be reduced without additional funding, while Chairman of the Joint Chiefs of Staff Gen. Dan Caine noted that maintenance schedules and future defense capabilities could be affected if funding is delayed.

Conflict risks remain elevated: Fighting resumed earlier this month after a U.S.-Iran ceasefire broke down. President Trump has said the United States could expand military operations to include additional strategic targets, including energy infrastructure and facilities associated with Iran's nuclear program. Any further escalation could increase uncertainty surrounding regional energy supplies.

Human and political costs continue to rise: U.S. military fatalities have reached 18, while approximately 430 personnel have been injured. Lawmakers from both parties have expressed concerns over the administration's handling of the conflict, and continued debate over additional funding is expected as Congress considers future appropriations legislation ahead of the midterm elections.

Market outlook

Developments involving Iran's energy infrastructure and shipping routes in the Persian Gulf, including the Strait of Hormuz, are likely to remain closely watched given their potential implications for global energy markets. Congressional decisions on supplemental defense funding and future military operations may also influence expectations for government spending and broader market sentiment.

Sources: Reuters; U.S. Department of Defense; U.S. Senate Appropriations Committee testimony.