How Much Is the Hormuz Blockade Costing the US?

SPEAKER_1 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Becca Wasser (0:10)

The US has essentially blown through enormous parts of its missile stockpiles.

Sarah Holder (0:17)

Becca Wasser leads defense coverage for Bloomberg Economics.

Gerry Doyle (0:21)

This is the cost of a big war, of fighting an adversary that had a whole bunch of ballistic missiles that can hit around the region, that can strike your bases, that can aim at your ships.

Sarah Holder (0:32)

Gerry Doyle is Bloomberg's global defense editor.

Gerry Doyle (0:35)

These compounding costs are not anything I would say is unexpected, but this is just sort of the baked-in baseline for when you fight a war, this type of war, these are the expenses that you can expect to encounter.

Sarah Holder (0:48)

Becca and Gerry have new reporting out this month that puts a price on the steadily mounting cost of the latest phase of the war. The U.S.'s blockade of Iranian oil.

It's running as high as $42 million a day, and there's no clear end in sight.

Gerry Doyle (1:06)

There's something like 17, 18 ships participating in this blockade of Iran, and they are tasked with making sure that Iran can't get any shipping out of the Strait of Hormuz, out into the wider world, and sell their products. So the blockade is intended to slowly choke off Iran's economy and force them to negotiate any table.

Becca Wasser (1:26)

There have been a great deal of costs for the United States when it comes down to continuing this blockade. There are financial costs, there are readiness costs, there are opportunity costs. Do they meet the objective, and are they worth it?

Sarah Holder (1:43)

I'm Sarah Holder, and this is the Big Take from Bloomberg News. Today on the show, tallying the cost of the US's naval blockade in the Strait of Hormuz, not only in dollars, but in morale. Weapons stockpiles and US defense capabilities around the world.

Gerry and Becca, you worked together on a new piece about the mounting and far-reaching military costs of the US blockade of Iran. And we're talking on September 15th, so these numbers could go up. But Becca, how did you come up with this figure? And what was the total cost of this blockade so far?

Becca Wasser (2:29)

We've done this by tracking ships, looking at the duration of time that they have spent in the Middle East, as well as using some estimates that have been published by the Congressional Budget Office to help us have that sense of daily operating costs and projecting it out over time. And we're looking right now at what we've referred to as blockade 2.0, because the US has already had a blockade. It's lifted it initially. And then when the memorandum of understanding with Iran fell apart, it re-instituted a blockade. So we're now in the second phase, if you will. And just the operating costs for that phase of the blockade have gone up to 2 billion alone. The initial naval buildup, Operation Epic Fury, which was that initial high-intensity war with Iran, as well as the first blockade altogether, we see US naval operating costs going up to an estimated 7.1 billion. And that is a total that rises day to day.

Sarah Holder (3:32)

How is the US paying for all this?

Becca Wasser (3:34)

Yeah, so some of the naval ship operating costs are essentially already budgeted for. But if you look at the sheer amount of ships that are being used just for this operation, the amount of time that they are spending doing pretty much constant operations, it means that what was budgeted probably isn't enough. That means that you're going to have to try and reprogram funds from elsewhere to cover those costs. We've also seen members of the Trump administration go to Congress and say that they need more funds for the Iran War. So all of that to say, the final bill for the Iran War is going to be quite high.

And some of these naval operating costs for the blockade are only going to be a drop in the bucket of that.

Gerry Doyle (4:22)

You know, it's on top of the actual dollar figure cost, so of course, there's also opportunity cost. These ships and people could be doing other things. They could be training. They could be improving their skills. They could be patrolling other parts of the world. They could be maintaining the ship. These ships could be getting refit. You know, you saw the pictures of the USS Abraham Lincoln that pulled into Thailand. A lot of that is just normal, the visible stuff that's sort of normal wear and tear that you see on a ship that's been in the ocean in a saltwater environment for a long time. But the people aboard that ship and the machinery inside that ship certainly suffered from the long deployment. And that sort of stuff has effects that echo through time.