The U.S. war with Iran could cost the American economy as much as $210 billion, according to fiscal analyst Kent Smetters, director of the widely used Penn Wharton Budget Model.
The ongoing conflict is already driving disruption to trade, global energy markets, and gasoline prices, though it is difficult to precisely estimate how much the war will impact the economy, Smetters told Fortune.
His predictions currently estimate a $115 billion economic loss, though that figure could range between $50 billion and the upward bound of $210 billion depending on the nature and duration of the conflict.
One impact of the war being waged by the US and Israel against Iran that is not getting as much attention as it deserves, is the impact on the global supply of fertilizer.
Prices for key fertilizer inputs like Urea are surging.
For most of history it was obvious that one should schedule conflict so as to avoid clashing with the agricultural cycle. Autumn, when the harvest was in, was the ideal moment for big battles. That was why major military maneuvers were generally held at that time of year. Even as late as 1914 the harvest timetable may have played some role in the war planning of combatants.
The current war is disastrous from the point of view of the modern agricultural cycle.
The gulf region handles about one third of the global trade in inorganic nutrients and in terms of the agricultural cycle this is the key moment for shipments to be steaming out from the Gulf towards the major agricultural zones of the world.
About 100 million people live in the countries belonging to the Gulf Cooperation Council — Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman — all now under Iranian attack. Kuwait, Qatar and the UAE are, for all practical purposes, completely dependent on the desalination plants, particularly for metropolises such as Dubai. Saudi Arabia, and especially its capital, Riyadh, also relies heavily on them.
Under international law, the desalination plants are protected. But I have seen enough Middle Eastern wars to know the weight of the Geneva Conventions when missiles and bombs start flying. And they are: Iran has attacked a power station in Fujairah, UAE that keeps one of the world’s largest desalination plants running. In Kuwait, debris from a drone interception caused a fire in one of the country’s plants.
The risk is enormous. Take the Jubail desalination plant, located on the Persian Gulf coast of Saudi Arabia. It supplies Riyadh, via a roughly 500-kilometer-long pipeline system, with more than 90% of its drinking water. “Riyadh would have to evacuate within a week if the plant, its pipelines, or associated power infrastructure were seriously damaged or destroyed,” according to a 2008 memo from the US embassy in the kingdom released by Wikileaks. “The current structure of the Saudi government could not exist without the Jubail desalinization plant,” the memo stated.