Evaluating the Economic Damage to Iran From Operation Epic Fury: An Initial Estimate

With the conflict still unfolding, FDD estimates economic damage to Iran at approximately 40 percent of its pre-war GDP — a first accounting that speaks to the breadth and depth of Iran’s losses. Specifically, FDD estimates total damage in the range of $50 billion to $300 billion, with our most likely estimate at approximately $144 billion. FDD will periodically update these estimates as more information becomes available and events unfold.

This wide range of figures reflects, in part, that estimating the economic costs of an ongoing conflict is inherently difficult, and Iran presents particular challenges. Iran’s sanctions-era financial architecture routes transactions through opaque intermediaries, making independent verification difficult, even in peacetime. A large informal sector — an estimated 30 percent of all economic activity — is structurally underrepresented in official statistics, and wartime information blackouts make independent damage assessment harder still.

The model deliberately excludes considerable damage categories — human capital losses, the price of reconstituting Iran’s proxy network in the region, long-term foreign direct investment deterrence, wartime inflation, and reconstruction financing costs — that are real and substantial but which we cannot reliably quantify at this stage.

Methodology

The model draws on two additive components — hydrocarbon revenue losses and physical replacement costs — each capturing a different dimension of economic harm. Within each component, the model produces low-, mid-, and high-point estimates.

Figures cited below are mid-point — meaning, most-likely — estimatesunless otherwise noted. The mid-point estimate is not the arithmetic midpoint of the low and high scenarios; rather, it reflects the model output associated with our best single judgment for each independent variable. The low and high scenarios replace each of those judgments with a consistently more or less conservative assumption.

1. Hydrocarbon Revenue Losses ($53 billion)

This component estimates Iran’s hydrocarbon revenue losses across crude oil, natural gas, and petrochemicals.

We modeled crude oil revenue in two phases. During the period between the start of the conflict and the U.S. blockade, we assess that Iran exported oil at roughly its pre-war volumes at elevated wartime prices, generating a revenue windfall compared to the pre-war baseline that reduces the cumulative loss. We assume that the U.S. blockade — effective April 13 — and damage to infrastructure, market disruptions, and mining in the Strait of Hormuz will cut subsequent exports substantially for at least the next six months. As more information becomes available about export volumes, outage durations, and how much of what Iran exports translates into realized revenue, we will update this model accordingly.

Gas and petrochemical losses are modeled across a single phase because strikes on related infrastructure occurred near the outset of the conflict — such as the one on the  Asaluyeh/South Pars complex (over 48 percent of pre-war output) on March 18. We assume that these damages — along with damages across the petrochemical supply chain — will mean that Iran will not recover pre-war export levels for at least 12 months.  

2. Replacement Costs ($91 billion)

This component estimates the one-time reconstruction cost of assets destroyed in the conflict, drawing on satellite imagery, CENTCOM battle damage reports, assessments by the International Atomic Energy Commission, reporting, and official Iranian statements. It covers military and strategic assets, economic infrastructure, and disruptions to the informal economy.

Our most likely estimate is that replacement costs are approximately $91 billion. Military and strategic assets — nuclear facilities, missile and drone production infrastructure, air bases, naval vessels, and air defense systems — make up roughly half that total, at approximately $46 billion, which is equivalent to 4-6 years of Iran’s pre-war defense budget. That may understate the true loss. Most military hardware has a use-life measured in decades, and rebuilding Iran’s nuclear program, missile production infrastructure, and naval fleet would require, not only substantial financial resources, but time, technical expertise, and supply chains that U.S. sanctions have already severely constrained.

We assume, for now, that Iran will remain under U.S. sanctions for the foreseeable future. This will drive up reconstruction costs for Iran. Where possible, we attempted to estimate replacement costs under sanctions. For many assets, however, such as Iran’s F-14s, a replacement would simply not be available to the Iranians, so we estimated the market value of the asset.  

Conclusion

The $144 billion figure will change. New damage assessments, a longer blockade, and the compounding costs of reconstruction under sanctions will push it higher. FDD will update this model as events unfold. Regardless, Operation Epic Fury has imposed massive economic losses on the Iranian regime; FDD’s research will illustrate the scale of that damage.

Elaine K. Dezenski is senior director and head of the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). Daniel Swift is a senior research analyst at CEFP and a retired U.S. diplomat. For more analysis from the authors and FDD, please subscribe HERE. Follow FDD on X @FDD. Follow Elaine on X @ElaineDezenski. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.