Six Key Financial and Economic Consequences of Six Months of War in Iran
Main Financial and Economic Impacts of the Iran War
WASHINGTON, Aug 27 (Reuters) - Six months after the United States and Israel launched strikes on Iran, the war that President Donald Trump has called a "little excursion" has become a deeply unpopular stalemate that threatens to derail his presidency.
Iran has not surrendered, shipping through the Strait of Hormuz remains severely disrupted, and there is no clear path to ending the conflict that Trump once predicted would be over in four weeks.
Now, in apparent recognition that further military strikes won't force concessions from Iran, the U.S. is reverting to a campaign of economic pressure in hopes of further weakening Iran's government. Secretary of State Marco Rubio has told allies it's unlikely the U.S. will launch new attacks "for the time being."
What happens next is unclear but many of the war's probable enduring consequences — for the United States, Iran and the global economy — are already apparent.
Here are six of those:
1. Trump is paying a political price
Declining Approval Ratings
The war was unpopular at the outset and has become more so. Trump's approval rating has fallen from 40% to 33% since the conflict began, according to Reuters/Ipsos polling, as rising gas prices have undercut his 2024 campaign promise to lower costs for Americans.
Public Perception and Voter Sentiment
Trump, who campaigned on a promise to end wars, has argued that Iran's missile buildup and nuclear ambitions required action, but he has not persuaded most voters. Just 31% of the country approve of the conflict, according to the polling. That's a lower number than other recent U.S. conflicts at a similar stage, including the war in Afghanistan, which had approval ratings above 50% for years in Gallup polls.
Impact on Republican Party
Voter anger over high prices poses a problem for Trump's Republican Party before November's midterm elections, when it must defend narrow majorities in both chambers of Congress.
The conflict has also widened a rift between more isolationist Republicans, who want to see a quick end, and Republican lawmakers who believe Trump should keep military pressure on Tehran.
2. The war has shaken the global economy — but less than feared
Oil Prices and Economic Forecasts
The U.S. and Israeli attacks triggered immediate alarm because the Strait of Hormuz – which narrows to about 21 miles (34 km) wide between Iran and Oman — carries roughly a fifth of the world's energy supplies. The disruption sent oil prices sharply higher and prompted fears of a global downturn.
The damage has been significant but less severe than many economists initially feared. The International Monetary Fund has cut its global growth forecast twice since the war began and now expects the world economy to grow by 3.0% this year, compared with its 3.3% forecast in January.
Global Economic Resilience
Still, the global economy has proved more resilient than during the oil shocks of the 1970s. Major economies are less energy-intensive than they were then, and strong spending and investment — including a continuing boom in artificial intelligence — have helped cushion the blow.
3. Iran is wounded but not defeated
Military and Economic Damage
Iran's military and economy have suffered severe damage, but Tehran can still launch attacks and keep the Strait of Hormuz closed.
In May, the top U.S. military commander for the Middle East, Admiral Brad Cooper, told Congress that U.S. forces had destroyed 161 Iranian naval vessels and disabled 82% of its air-defense systems. He said Iran's air force, which had previously flown up to 100 sorties a day, was no longer conducting missions.
Iran's Retained Capabilities
Even so, Iran retains drones and missiles and has successfully attacked shipping and U.S. military installations around the region.
In March, Reuters reported that the United States could determine with certainty that it has destroyed only about a third of Iran's vast missile arsenal. The status of around another third was less clear but bombings likely damaged, destroyed or buried those missiles in underground tunnels and bunkers, sources told Reuters at the time.
Socioeconomic Consequences
The war has killed thousands and deepened Iran's economic crisis, worsening inflation and disrupting trade. In July, food inflation hit 128% year-on-year, according to Iran’s Statistical Center.
But it has also pushed political divisions into the background and prompted a tougher crackdown on dissent.
4. The Middle East has been destabilized, exposing U.S. allies
Regional Security and Threats
The U.S.-Israeli war was meant to remove Iran as a threat to the Middle East, but analysts say it has instead emboldened Tehran and left the region less secure.
Iranian missile and drone attacks on U.S.-allied Gulf Arab states hit U.S. military and diplomatic facilities and disrupted air travel.
Economic Impact on the Region
Iran's attacks on shipping, combined with a Houthi blockade targeting Saudi-linked traffic in the Red Sea, have raised insurance and transport costs across the region. The effect extends well beyond individual attacks on vessels, disrupting supply chains and adding to uncertainty for Gulf economies.
5. It could take longer for Iran to produce a nuclear weapon
Damage to Nuclear Facilities
U.S. and Israeli attacks during an earlier assault in June 2025 and in the opening phase of the current war badly damaged three of Iran's known enrichment plants and sites suspected of weapons-related work, while Israeli strikes have killed leading nuclear scientists.
Extended Nuclear Breakout Time
U.S. intelligence assessments in May put Iran's estimated nuclear "breakout time" — the time needed to produce enough fissile material for a bomb — at up to one year, from up to six months before the war.
Preventing Iran from obtaining a nuclear weapon is Trump's top stated goal for the war.
Uncertainty Over Nuclear Program
But the true state of the program is uncertain because U.N. inspectors have not returned to Iran's nuclear sites. The International Atomic Energy Agency has been unable to verify the location of roughly 440 kg of uranium enriched to 60% since the 2025
