💣Israel-Iran conflict 2025

The long-simmering rivalry between Israel and Iran—once confined to the shadows through cyberattacks, sabotage, and proxy warfare—has erupted into direct confrontation. What began as a cold conflict has ignited into a hot and costly display of firepower. With missiles flying and military assets mobilized, the financial toll is becoming ever more apparent.

Let’s compare the two nations’ military spending:

💰 A Surge in Spending

In 2024, Israel’s military expenditure soared to $45.3 billion, a dramatic rise from $22.5 billion just four years prior. This represents the sharpest increase since the Six-Day War in 1967, with much of the new spending driven by Israel’s engagements on multiple fronts—from Gaza and Lebanon to Yemen and Syria.

Since the 1960s, Israel’s defense spending has consistently outpaced Iran’s, historically averaging nearly five times higher. Today, the gulf has widened further: Israel now spends almost seven times more than Iran on defense. Iran’s military budget rose modestly, from $5.5 billion in 2020 to $6.6 billion in 2024, despite enduring international sanctions and economic constraints.

While Israel's robust budget supports a technologically advanced military, boasting precision air strikes, missile defense systems, and cyber capabilities, Iran’s outlays represent a far heavier burden relative to the size of its economy. Tehran continues to invest in drones, asymmetric warfare, and regional proxies, but the question looms: can Iran afford a prolonged, full-scale war with Israel?

Middle Eastern military spending reached $243 billion in 2024, a 15% rise from the previous year. Israel’s 65% jump in defense outlays was the largest annual increase in the region, reshaping the balance of power across a combustible geopolitical landscape.

📉 The Economic Shockwave

The conflict has already begun to ripple through the global economy. Israel’s offensive against Iran jolted financial markets amid growing fears of a broader regional war. Global oil prices spiked in the wake of the attacks, compounded by renewed uncertainty from trade tensions stirred by America’s shifting tariff policies.

Both Israel and Iran have closed their airspace indefinitely, joined by Iraq and Jordan. Major airlines swiftly canceled flights to the region, wary of a scenario reminiscent of the downing of commercial airliners during past conflicts.

Attention is now fixed on the Strait of Hormuz, a narrow but vital artery through which a fifth of the world’s oil flows. Iran has long threatened to shut the strait in times of conflict—a move that could strand tankers, choke energy supply chains, and send oil prices soaring.