Iran War Could Hinge on Who Runs Low on Munitions First

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1:41Gerry Doyle:On Monday, NATO announced it had shot down a second missile fired toward Turkey, sparking concerns that the Iran war could widen. Oil prices briefly topped$100 a barrel for the first time in four years, as oil production slows in several Gulf states and traffic through the Strait of Hormuz remains at a near standstill. As the U.S. and Israel continue their attacks, Iran has shown little sign of changing course. Over the weekend, the country appointed the son of Ayatollah Ali Khamenei as the new supreme leader.

2:16Becca Wasser:And it seems to me that there are two critical factors to look at. markets and munitions.

2:21Gerry Doyle:Former U.S. Secretary of State Antony Blinken sat down with my co-host David Gurra last week to talk about the factors that could bring a quicker end to the war. Big market losses, he said, could cause President Donald Trump to pull back. Or...

2:37Becca Wasser:Munitions. There's really a race on to figure out who expends their munitions first and fastest. We can be clear with the American people

2:45Sarah Holder:that this is not a fair fight.

2:47Gerry Doyle:In an interview on CBS's 60 Minutes, Defense Secretary Pete Hegseth said the U.S. and Israel's military resources can overwhelm Iran's.

2:56Sarah Holder:The ability for us to be up over the top and hunting with more conventional munitions, gravity bombs, 500-pound, 1 ,000-pound, 2 ,000-pound bombs on military targets, we haven't even really begun to start that effort of the campaign.

3:09Gerry Doyle:As the costs of the war continue to mount, the U.S.'s ability to stay in this fight depends on more than the Trump administration's appetite to continue. It might also come down to weapons. I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, the munitions powering each side of this conflict, how much they cost, and who could run out first. I sat down with Bloomberg's global defense editor, Jerry Doyle, and Bloomberg Economics defense lead, Becca Wasser, to find out.

3:47Gerry Doyle:Jerry and Becca, thank you so much for joining us. As the war in Iran escalates, there have been mounting consequences. There's the human toll. More than 1 ,000 Iranians have died, according to Iranian officials. Seven U.S. service members have died as of this taping. attacks on oil reserves have sent oil prices mounting. But today we're going to talk about weapons because they can be a useful proxy to understand how and how quickly this war might end. Jerry, you wrote in a story last week that just three days into the conflict, the Iran war has become attritional. What did you mean by that?

4:26Becca Wasser:Whoever runs out of their crucial munition first is going to be in a much worse position. As Iran burns through its missile inventory, firing them, the U.S. and Israel destroy those missiles on the ground and destroy launchers on the ground. And at the same time, balancing the other side of it, the U.S. and Israel and its partners using large numbers of air defense missiles to protect themselves.

4:50Gerry Doyle:How much does one of those Patriot air defense missiles that the U.S. and Israel are using cost? And what's the lifespan of this technology?

4:58Becca Wasser:It's a missile. So you fire it once and it's done. And they cost about$4 million each, maybe a few hundred thousand dollars more. So you can kind of see the mismatch between using a relatively expensive weapon like that to defend against something smaller and cheaper, like the sort of Shahed-136 one-way attack drone, basically rudimentary cheap, slow cruise missiles that Iran has and is launched in large numbers. If you use your air defense missile to defend against a system like that, you're losing the money battle.

5:31Gerry Doyle:And Becca, you've been crunching the numbers on this. Can you walk us through what we know about the supply of munitions on either side and how we know what we know?

5:42Sarah Holder:All right. So let's start with Iran. Iran, we don't have a very good sense of their missile and drone stockpiles. And part of that is by design. Last numbers that we have is Iran had about 2 ,000 or so ballistic missiles prior to the 12-day war, and that some of those were fired in great number. And then it has tried to rebuild in that interregnum period. In terms of drones, we don't have good data on what Iran drone production rates are, specifically Shahids, but we do have some decent data on the Russian side. They've been able to crank out upwards of 400 a day. So if you assume that Iran has a very similar production rate, you could imagine that their drone arsenal is quite large, shifting over to the U.S.

6:36Sarah Holder:and its Gulf partners. The Gulf partners have spent years and years buying U.S. weaponry, including a lot of very expensive air defense systems. We don't have a good sense of their stockpile numbers, but we have heard that they are running low on some of the precious air defense interceptors that they've been using, as Jerry said, to take out the missile and drone threat emanating from Iran since the start of this conflict. There's just never enough air defense systems to go around. There are never enough missiles and interceptors. So we don't have a good sense of stockpile numbers because they are classified.

7:13Sarah Holder:But at the rate at which they've been used, you could imagine that some of those are running a little bit low. That doesn't mean that the U.S. is running out, but it does mean that the U.S. may need to pull them from other theaters if possible. When you look at some of the long-range weapons, they're pricey, and those have been used to great effect already in this conflict. And the U.S. is trying to shift away from using those standoff weapons to now using closer-range stand-in weapons, in part because those joint attack munitions are more plentiful. But that requires the U.S. to be able to get a little bit closer in order to drop these largely by air.

7:54Becca Wasser:Maybe to put a sort of a quantifiable point on that, right? So if the U.S. used, say, 250 Tomahawk missiles in the opening days of this operation, so each of those is going to cost, let's sort of ballpark it a million dollars each, so probably a little bit more than that.

8:08Sarah Holder:1.7.

8:09Becca Wasser:1.7. All right. So let's say two. Let's just call it an even two million. So that's a half billion dollars spent just on the munitions, right? And we currently manufacture something like 90 Tomahawks a year. So it would take, you know, two and a half years to replace the tomahawks that were fired over the course of one day at the cost of half billion dollars.

8:31Gerry Doyle:What we're talking about here in terms of the cadence of how many munitions have already been deployed just, you know, 10 days into this war, is this typical, Becca?

8:42Sarah Holder:I think the intensity of U.S. and Israeli strikes is quite notable. The United States has said that they alone have conducted over 3 ,000 strikes. You also have the Department of Defense saying that they have used more air power in the first few days of this conflict than they did in the opening days of the war on Iraq. So, you know, if you look at this historically, it's a massive use of air power. It's a massive use of missiles. It's a massive use of American force, which leads to the question of how long does this go on?

9:20Gerry Doyle:Becca, what are the plans to replace weapons that have already been used in this conflict? Is production ramping up and how quickly could that happen?

9:31Sarah Holder:Production is ramping up, but I wouldn't say that it's quick. More recently, there have been efforts to try and scale missile production. Missiles and munitions are very volatile in terms of their procurement. And the thing that usually ends up on the cutting room floor had traditionally been munitions. I think Ukraine was a wake-up call for the United States in that it needed to get after this problem. So we did see some efforts there. More recently, we have this announcement of a potential supplemental for munitions to try and ramp up supply of some of the most critical munitions, including those air defense interceptors that have been used like Patriot, THAAD, as well as the standard missile series.

10:19Sarah Holder:But those are going to be longer term efforts. When they're saying that they're going to ramp production, we're looking at, you know, what the White House says, quadrupling it. But that's not until the 2030s. So it's going to take a while for that to happen, in part because it's a lengthy endeavor. And there's a lot of bottlenecks that exist in the munitions production process.

10:41Gerry Doyle:And what about on the Iranian side? How is Iran thinking about replacing munitions as they run through them? Jerry?

10:49Becca Wasser:It's very difficult to tell from the outside what they're able to produce. Most of their production facilities at this point in the war are going to be in places where you can't see them easily from a satellite, maybe underground, buried in a mountain, disguised as something else. And it's going to be much easier for them to replace the cheaper lower-end munitions they're using, like the Shahed, sort of these small cruise missiles, which are just a small step up from being a remote control airplane with an artillery shell strapped to it. Missiles are obviously much more difficult to produce in terms of materials, in terms of the expertise, the machinery that you need to do that and get them to work well.

11:30Becca Wasser:So it strikes me as very unlikely that Iran will be able to generate more missiles while the war is going on.

11:39Gerry Doyle:It seems like what you're both describing is that the U.S. is using missiles like Patriots that take lots of time, millions of dollars to produce to shoot down drones like the Shaheds that are cheap and quick to produce. I'm wondering whether that poses a sustainability challenge for the U.S. here or gives Iran a leg up.

11:58Becca Wasser:It's a sustainability challenge in the sense not that the U.S. is going to run out of munition, even air defense missiles, full stop. It's more that they would had to confront strain on their inventory that would force them to pull from other places that are very important to the U.S. military, such as the Indo-Pacific, where you have China, which has the world's largest conventional ballistic missile inventory with U.S. bases, obviously, in Korea, Japan, Guam, under threat from those missiles. So that would be the danger there for the U.S. side, that they start having to rob Peter to pay Paul in order to keep their air defenses in the Middle East robust.

12:43Gerry Doyle:After the break, Bloomberg's global defense editor, Jerry Doyle, and Bloomberg Economics defense lead, Becca Wasser, on what we know about the economic cost and the opportunity cost of the war so far.

13:06Gerry Doyle:Becca, I'm hoping you can help us put the overall cost of this war into context. How much has this been costing the U.S. already, even in its first few days?

13:19Sarah Holder:So I haven't crunched the numbers yet, but some smart analysts in D.C. already have. and we are looking at billions, billions of dollars, just in pure operational cost alone, we don't have full numbers of what has been expended yet. And once we do, I think we're going to see an enormous cost. But I think it's worth remembering that the human cost of war is probably the greatest cost. Already, we are seeing civilians in Iran taking the brunt of this conflict, we are also seeing human loss of life throughout the Gulf and elsewhere in the Middle East as well. And we've also seen now seven U.S. service members killed, which is very, very notable for the United States.

14:06Sarah Holder:So, you know, we have the financial costs, but war is not just about financial costs. And even in an attritional war, materiel is not going to be the most decisive factor. At the end of the day, the decision to end a war is often political, and sometimes it's more on the human costs that actually brings folks to the table.

14:28Gerry Doyle:I mean, and how long might it take for those costs, those real costs of human lives and those billions of dollars that have already spent on this war to filter into the political arena and make a difference in terms of how the administration is thinking about continuing this war?