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Six-month Iran conflict reshapes global economy, military balance

Conflict disrupts energy flows, accelerates inflation and strains U.S. military resources as geopolitical tensions persist.

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Sophie Laurent · FX & Rates Desk · 29 Aug 2026 · 01:39 · 2 min read
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Six-month Iran conflict reshapes global economy, military balance

Six months after the United States and Israel launched strikes against Iran, the conflict has reshaped regional military dynamics, disrupted global energy supplies and strained U.S. military resources, according to intelligence assessments and official reports.

The campaign, initiated in early 2025, targeted Iranian nuclear and weapons facilities, including three enrichment plants and related sites, according to U.S. military assessments. Admiral Brad Cooper, the top U.S. commander for the Middle East, testified before Congress in May that Iranian naval and air-defense capabilities had been significantly degraded. Iranian naval vessels destroyed totaled 161, while 82% of its air-defense systems were disabled. Air force sorties fell from up to 100 per day to zero, with only about a third of the country’s missile arsenal confirmed destroyed due to extensive underground bunkers.

The conflict has also strained U.S. military resources. Eighteen service members have been killed and more than 750 injured, according to official reports. Forty-two U.S. military aircraft have been lost, including to Iranian fire and accidents, per a Congressional Research Service assessment. The Pentagon has exhausted “virtually all” of its global stockpile of certain precision-guided munitions, while Patriot interceptor supplies have been depleted by about 65%. THAAD interceptor reserves have been reduced by at least 38%, according to the Center for Strategic and International Studies.

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Energy markets remain vulnerable as the Strait of Hormuz, a critical chokepoint through which roughly a fifth of the world’s energy supplies transit, remains a flashpoint. The waterway narrows to just 21 miles between Iran and Oman, underscoring its strategic importance amid ongoing tensions.

Domestic and international economic repercussions are mounting. Food inflation in Iran surged to 128% year-on-year in July, according to the country’s Statistical Center. The International Monetary Fund has downgraded its global growth forecast for 2025 to 3.0%, down from a January projection of 3.3%, citing heightened geopolitical risks and supply chain disruptions.

U.S. political pressure is intensifying as the conflict enters its seventh month. President Donald Trump’s approval rating has fallen to 33% from 40% at the outset, with only 31% of Americans supporting the intervention, according to Reuters/Ipsos polling. Secretary of State Marco Rubio has indicated that new U.S. strikes are unlikely “for the time being,” while Republican lawmakers face growing scrutiny ahead of midterm elections where narrow majorities in both chambers are at stake.

Military deployments have also reached historic levels. The USS Gerald R. Ford has remained deployed for more than a year, the longest such deployment since the Vietnam War, while the USS Abraham Lincoln has spent 200 consecutive days at sea. Intelligence assessments suggest Iran’s nuclear “breakout time” has extended to up to one year, though the International Atomic Energy Agency has been unable to verify the location of roughly 440 kg of uranium enriched to 60% since the 2025 strikes.

This article was produced with AI assistance and edited by a Finance Review Daily journalist.
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Written by
Sophie Laurent
FX & Rates Desk

Sophie covers currency markets and central bank policy across Europe, with a focus on how rate decisions ripple through FX pairs. She has been tracking the ECB's policy path since the start of the current easing cycle.

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