The war with Iran, initiated by the US and Israel, has a cost of more than just lives, though that is a significant factor to consider. This conflict, which extends throughout the Middle East and reaches the territory of the European Union (EU)—as in the case of Cyprus—and NATO—as in the case of Turkey—has many ramifications. And many, if not all, are negative. The effects on the global economy are evident. Although the developed world is less dependent on crude oil than in previous supply shocks, the surge in the price of a barrel, which has accumulated a rise of around 30% in a week, is painful because it is being passed on—and has already begun to be passed on—to fuel prices. Gas is also becoming more expensive, and therefore, so is the price of electricity. All of this impacts inflation, that is, the increase in the general price level, which had been moderating and allowing for low interest rates. If it were a short-lived conflict, the effects could dissipate relatively quickly. But the problem is that the crisis doesn't appear to be short-lived. And that's the fear that has caused nervousness in the markets. Uncertainty is the worst enemy. Without directly participating in the war, the Persian Gulf countries, allies of the US, see that the decision by President Donald Trump and Israeli Prime Minister Benjamin Netanyahu is penalizing them. And they are already halting operations. crude oil productionThe longer this situation lasts, the more it will cost to return to the normal supply cycle for the rest of the world.
But the start of a war of this nature does not have a harmless effect on the US either. Despite being exporters of crude oil thanks to the frackingThe US will not only be affected by the rising price of oil and, consequently, fuel—a sensitive issue for citizens and one that Trump used to win the election—but the longer the conflict lasts, the more the country's finances will be affected. According to analyses by the Center for Strategic and International Studies (CSIS), the United States spent at least $3.7 billion in the first 100 hours of the war. This amounts to nearly $900 million per day (almost €800 million). These sums are largely not included in the budgets approved by Congress, unlike the $31 million per day spent to arrest Nicolás Maduro in Venezuela, which was budgeted.
If the conflict is not stopped in a relatively short period of time, the damage will not only be to the global economy but also to that of the US, a country that in 2024 elected a new president, Donald Trump, who promised to focus on domestic policy but is doing the exact opposite. US economic data has not been very positive for some time: the trade deficit is not decreasing despite the tariffs—struck down by the country's Supreme Court—and in February, 92,000 jobs were lost instead of the 50,000 created, as analysts predicted. If the war lasts too long, the country's finances could suffer and debt interest rates could rise. And the conflict, in addition to worsening the global economy, will have had a boomerang effect.
