Costs of War – The Iran war will have long-term consequences
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Costs of War – The Iran war will have long-term consequences
The war on Iran has consequences that reach far beyond the battlefield and the Persian country itself. What in the first days might appear to be a regional military escalation has increasingly evolved into a broader geopolitical, economic, and energy crisis with global implications. From disrupted energy markets and rising inflation to declining public trust and accelerating geopolitical fragmentation, the effects of the war are already being felt across continents – specifically in Europe.
At the same time and no less, the conflict has also created direct consequences for ordinary people inside Iran. Rising prices, financial instability, energy and water shortages, growing uncertainty have become part of everyday life for many Iranians, further increasing social pressure within an already fragile economic and political environment. However, the initial interest of the US and Israel was – at least as they told – to weaken the regime, for now we only see further weakening social structures and a shaken Europe as the result. In this article, we have collected some of the long-term consequences induced by the war that has been going on since February.
One of the most immediate consequences of the war has been the further erosion of trust in international diplomacy and global institutions. The conflict has exposed the limits of existing diplomatic mechanisms, alliance structures and once again demonstrated how quickly fragile regional balances can collapse. Moreover, the previous attempts at a ceasefire have all failed, as they have typically served the aspirations of certain countries, not peace, but rather the transformation of the regional order. The war has also raised growing concerns about how the crisis is being handled, how civilians are being protected, and what role major powers are playing in the conflict - not only in Iran and the wider Middle East, but also in America and Europe as well. Trump's empty promises to help the Iranian people are very similar to what the region has experienced before from American politicians. And we should not forget, this war came at a time when years of sanctions, inflation, and instability had already strained Iranian society. The outbreak of war further deepened economic insecurity and uncertainty among consumers and businesses alike.
Perhaps the most immediate global impact has been visible in the energy sector. The conflict placed the Strait of Hormuz – one of the world’s most strategically important maritime chokepoints – under enormous pressure. Roughly one-fifth of global oil supplies pass through the strait, meaning any disruption immediately affects global markets. And it did affect global markets.
Oil prices surged rapidly after the outbreak of the war, while fears over supply disruptions created volatility across both oil and LNG markets, and after a few weeks also in the fertilizers market.
The effects quickly reached consumers. Rising fuel prices increased transportation and production costs although not at the same pace, but globally, contributing to higher grocery prices, more expensive air travel, and broader inflationary pressures. Even after ceasefire announcements, shipping activity in the Strait of Hormuz remained significantly below normal levels, underlining how fragile global energy security remains. The crisis also highlighted a broader strategic dilemma: while many countries seek to accelerate the green transition, global economies remain deeply dependent on fossil fuel supply routes and geopolitical stability. This was a cruel reality to face in Europe.
The financial costs of the war are already enormous and continue to grow. there is no complete data and calculations regarding the real costs of the war - nor for America, nor for Iran, nor for the world. According to Pentagon estimates presented to lawmakers in late April, the conflict initially cost the United States around $25 billion. However, experts and insiders soon argued that the real figure is likely far higher once damaged military infrastructure, destroyed assets, and long-term operational costs are included. Several estimates now place the actual cost closer to $40-50 billion. More recently, Pentagon officials updated the estimate to roughly $29 billion, reflecting rising operational and replacement costs. The broader economic effects may prove even more severe. The war has contributed to inflationary pressures, market uncertainty, and slower economic growth. According to several economic assessments, higher energy prices alone have added tens of billions of dollars in additional fuel costs to the American economy.
Iran itself has also suffered major and yet bigger economic losses. Oil export disruptions, damaged infrastructure, declining investor confidence, and the continued pressure of sanctions have placed additional strain on an already weakened economy. Some estimates suggest the conflict may have cost Iran up to 10% of its GDP. So the war has revived a long-known statement: modern conflicts are no longer measured only in military victories, but increasingly in long-term economic sustainability.
The war has also accelerated a broader process of geopolitical fragmentation. The conflict deepened divisions between global powers and further weakened already fragile international cooperation frameworks. Rather than producing unity, the crisis exposed competing geopolitical interests among major actors, including the United States, China, Russia, Gulf countries, and European states. Energy security, military alliances, sanctions policy, and strategic infrastructure are part of a wider geopolitical competition.
The conflict also reinforced the growing importance of “hard power” in international politics. Energy infrastructure, maritime routes, cyber capabilities, and military positioning are undeniable important strategic tools. At the same time, the war demonstrated how regional conflicts can rapidly evolve into global crises in an interconnected world. Supply chains, financial markets, and energy systems are all increasingly vulnerable to geopolitical instability.
The war on Iran therefore represents far more than a Middle Eastern conflict. It reflects a broader transformation of the international system – one increasingly shaped by fragmentation, strategic rivalry, and uncertainty rather than cooperation and predictability. And it yet again shows, the Board of Peace, set up with great resonance, was another tool not to stabilize, but to show strength.
Author: Blanka Benkő-Kovács, advisor - LCTS, LUPS
Image source: Unsplash