Two months after the US-Israel war with Iran began on February 28, the human and fiscal costs are already substantial. The death toll in Iran alone is estimated at between 3,000 and 6,000, while the US military campaign has cost about $25 billion so far, according to the Pentagon’s first official estimate.
The economic costs, however, have extended far beyond the battlefield, rippling through oil prices, stock markets, bond yields and currencies.
Oil spikes as truce hopes fade: Brent crude futures rose almost immediately after the conflict began, climbing from $72.29 a barrel on February 27, a day before the war started, to above $100 by mid-March.
Prices cooled in April as ceasefire hopes briefly returned, easing to around $90 by mid-April. That relief has since reversed, with US-Iran peace talks stalling and fears of prolonged disruption around the Strait of Hormuz resurfacing.
Markets split on war impact: Equity markets have not reacted uniformly to the war. The Sensex is down more than 5% from February 27, while the UK’s FTSE 100 and Germany’s DAX have also lost around 5%, reflecting the pressure on oil-importing economies and Europe’s sensitivity to energy costs.
Oil shock rattles bond markets: The war’s second-order impact is visible in bond markets. Higher oil prices have revived inflation expectations, reducing the room for central banks to cut rates quickly.
Borrowing costs have risen across major economies since February 27, led by the UK, where 10-year gilt yields are up 73 basis points. The US, Germany, Japan and India have also seen 10-year yields rise by around 38-44 basis points.
