The Iran War Has Cost Global Companies At Least $25 Billion, Report Shows
The U.S.-Israel war with Iran has already cost companies around the world at least $25 billion, according to a new report.
Reuters reported Monday that at least 279 publicly listed companies in the United States, Europe, and Asia have cited the war as a reason for defensive financial moves, including price increases and production cuts.
The biggest pressure point is the Strait of Hormuz, the narrow waterway that carries a major share of the world’s energy supplies. Its closure has pushed oil prices above $100 a barrel, more than 50% higher than before the war, while driving up shipping costs and disrupting supplies of fertilizers, helium, aluminum, polyethylene, and other industrial inputs.
Airlines have taken the largest quantified hit, accounting for nearly $15 billion of the reported corporate costs, as jet fuel prices have nearly doubled, Reuters found. Automakers, consumer goods companies, chemical producers, and manufacturers are also warning that higher energy and raw material costs are beginning to squeeze margins.
Toyota warned of a $4.3 billion hit, while Procter & Gamble estimated a $1 billion post-tax profit blow, Reuters noted. Continental, the German tire maker, expects at least 100 million euros, or about $117 million, in costs from the second quarter as oil-linked raw materials become more expensive.
The effect is also reaching consumers. McDonald’s CEO Chris Kempczinski said elevated gasoline prices are weighing on lower-income customers, telling analysts that “elevated gas prices are the core issue we’re seeing right now,” Reuters reported.
For some companies, the pain is just beginning. Reuters cited analysts who said first-quarter earnings remained relatively resilient, but margin forecasts for the second quarter have already been cut in industrials, consumer discretionary companies, and consumer staples.
Goldman Sachs analysts said European companies are likely to face pressure as hedging protections expire and passing costs to customers becomes harder. The corporate bill comes on top of the direct cost of the war to the U.S. government.
A senior Pentagon official told lawmakers in April that the U.S. war in Iran had already cost $25 billion, mostly for munitions, Reuters reported separately. Defense Secretary Pete Hegseth defended the spending, asking lawmakers, “What would you pay to ensure Iran does not get a nuclear bomb?”
Reuters reported that disruptions in oil and natural gas shipments have helped push U.S. gasoline prices to their highest level in nearly four years, adding pressure to household budgets before the midterm elections. For global companies, the $25 billion figure may be only an early tally. Rami Sarafa, CEO of Cordoba Advisory Partners, told Reuters, “The true earnings hit has not yet materialized in most companies’ results.”
