US, Iran at War; Oil Prices Spike
The U.S. and Israel continue major combat operations against Iran, with the new Iranian Supreme Leader vowing to keep the Strait of Hormuz blocked. Oil trade is paralyzed, and lawmakers are questioning the cost-benefit calculus amid rising economic pressure on U.S. households. A U.S. refueling plane crashed in Iraq, adding to the conflict's risks and costs.
The conflict that began in late February has already cost the U.S. billions, with estimates suggesting over $11.3 billion spent in the first six days alone. Munitions expenditure is a major driver, reaching $5.6 to $6 billion in the opening days. This rapid expenditure is raising concerns among lawmakers about the depletion of munitions stockpiles and the broader budgetary impact of prolonged operations. The Strait of Hormuz is a major chokepoint for global energy trade, and its disruption is sending shockwaves through markets. Roughly 20% of the world's oil and natural gas usually passes through the strait, and the disruptions have caused Brent crude prices to surge. Goldman Sachs Research estimates that a full one-month closure could increase oil prices by $15 per barrel. Adding to the conflict's costs, a U.S. Air Force KC-135 refueling aircraft crashed in Iraq, killing all six crew members. The crash occurred during a combat mission but was not a result of hostile fire. The incident is under investigation, and the identities of the service members are being withheld until their families are notified. The war is creating a surge in demand for interceptor drones, as countries seek to protect critical infrastructure. However, some manufacturers are unsure if they can keep up with the influx of business. The conflict is also accelerating a shift in how Israel perceives innovation, with a new industry emerging that connects civil-defense innovation with national resilience and economic growth.
