The eruption of Operation Epic Fury on February 28, 2026, marked a tectonic shock that shattered a half-century-old global security architecture. With the killing of Supreme Leader Ali Khamenei in the opening hours, the US–Israel war against Iran rapidly evolved from a conventional air campaign into a brutal laboratory of defense economics. Beneath the rhetoric of sovereignty and security lies a vast financial engine operating with surgical precision, converting every explosion at Natanz or Fordow into line items on multinational balance sheets.

This war represents the culmination of a cascading escalation that has been building since 2023. By day 12, US expenditures had reached an extraordinary $16.5 billion. Daily operational costs surged to as much as $500 million, underscoring the voracious appetite of modern warfare for precision-guided munitions. Iran’s retaliatory closure of the Strait of Hormuz triggered a spike in oil prices beyond $118 per barrel, arguably the most severe energy disruption since the crises of the 1970s.

Militarily, Iran has absorbed devastating losses, with over 190 ballistic missile launchers and 140 naval vessels destroyed in coordinated strikes. Yet Israel has not been immune. Its economy has been strained by costs of roughly $3 billion per week, driven by reserve mobilization and the suspension of civilian activity. This war has exposed a widening chasm between physical devastation on the battlefield and financial prosperity in the stock exchanges of Wall Street and Tel Aviv.

The transformation signals the emergence of a new order in West Asia, where military power is measured by the depth of ammunition inventories. As the dust settles over Tehran, the contours of economic gain become increasingly clear. War is no longer viewed merely as a failure of politics, but as a catalyst for growth within a global defense industry operating on a full wartime footing.

For the US defense industry, the war in Iran has been a windfall, turning deficits into surpluses almost overnight. Within days of the operation’s launch, shares of major contractors surged: Northrop Grumman rose 6%, RTX (formerly Raytheon) climbed 4.7%, and Lockheed Martin hit a 52-week high with a 3.3% gain. These increases were fueled by extraordinary ammunition consumption. In just six days, the US launched 319 Tomahawk missiles worth $1.2 billion, each priced at approximately $3.5 million. Concerns over dwindling stockpiles prompted Defense Secretary Pete Hegseth to request an additional $200 billion from Congress to replenish arsenals and accelerate advanced munitions production.

In Israel, a similar dynamic is unfolding, albeit with more existential stakes. Three defense giants, Elbit Systems, Israel Aerospace Industries (IAI), and Rafael, reported combined order backlogs exceeding $80 billion in early 2026. Elbit Systems alone recorded a historic $28.1 billion in orders, 72% of which came from international clients impressed by the battlefield performance of its Iron Fist systems and AI-enabled technologies. Its shares on NASDAQ surged to $1,014.33 by mid-March 2026, marking a 16% jump following quarterly revenues that exceeded $2 billion for the first time in the company’s history.

The Israeli government has seized this momentum to accelerate the partial privatization of IAI and Rafael through initial public offerings on the Tel Aviv Stock Exchange. IAI is estimated to be valued between $25 billion and $32 billion, while Rafael’s valuation ranges from $10 billion to $23 billion. Plans to divest 30–49% stakes aim to raise fresh capital for a “decade of force-building,” while also offsetting a swelling fiscal deficit driven by $6.4 billion in military expenditures within just the first 20 days of war. Amid destruction, these corporations are being reforged into more competitive global players.

Emergency procurement contracts continue to flow. Boeing secured an $8.5 billion deal to supply 25 F-15IA fighter jets to the Israeli Air Force, while Lockheed Martin received accelerated contracts for PAC-3 MSE missile production. Demand is expected to rise further as Gulf states seek to construct integrated air defense systems to shield themselves from residual Iranian missile capabilities operating under decentralized command structures.

Oil Barter and Eastern Lifelines

Iran has not faced this storm alone. Strategic alliances with Russia and China have become vital arteries sustaining Tehran’s economic and military resilience. Russia, viewing Iran as a critical partner, signed a €6 billion ($6.5 billion) agreement to deliver 48 Su-35 Flanker-E fighter jets. Production of the first batch of 16 aircraft has already begun at the Komsomolsk-on-Amur facility, with deliveries scheduled from 2026. Moscow has also supplied €500 million worth of Verba MANPADS systems, including 500 launchers and 2,500 missiles effective against cruise missiles and attack drones.

China’s role has been more subtle yet strategically profound. Beijing has granted Iran full military access to its BeiDou satellite navigation system, enabling high-precision targeting without reliance on US-controlled GPS. Chinese firms have reportedly shipped nearly 1,000 tons of sodium perchlorate, a key component for solid rocket fuel, via Iranian state vessels departing from Gaolan port. Meanwhile, negotiations for the sale of CM-302 (YJ-12) anti-ship missiles are nearing completion, potentially equipping Iran with capabilities to threaten US carrier groups in the Gulf.

These transactions largely bypass the dollar system. China now purchases nearly 90% of Iran’s oil exports, generating approximately $31.2 billion annually, much of it settled through credits for weapons and essential goods. This “oil-for-arms” barter model allows Iran to modernize its military despite severe sanctions. Russia and Iran have also integrated their SPFS and CIPS financial messaging systems as alternatives to SWIFT, ensuring uninterrupted capital flows for defense contracts.

This Eurasian involvement goes beyond military assistance, it represents a strategic investment by China and Russia to erode US hegemony in the region. By supplying advanced systems such as the YLC-8B anti-stealth radar capable of detecting F-35 aircraft, China is directly enabling Iran to challenge Israeli air superiority. The resulting anti-access/area denial (A2/AD) architecture raises the political and economic costs of future US intervention to potentially prohibitive levels.

Challenging Dollar Hegemony

The most enduring consequence of the 2026 war may not be territorial shifts, but the accelerated erosion of US dollar dominance, the so-called petrodollar system. The closure of the Strait of Hormuz has forced global markets to seek financial alternatives less vulnerable to political weaponization. Initiatives such as BRICS Pay and the proposed “Unit” digital currency have gained traction, structured around a basket comprising 40% physical gold and 60% member currencies. This shift has driven gold prices above $5,500 per ounce in early 2026, fueled by aggressive central bank accumulation of neutral reserve assets.

Iran has intensified its use of blockchain and cryptocurrency platforms to process international payments, integrating domestic systems with Russia’s SPFS. In response, the US issued “General License U,” permitting the sale of 140 million barrels of stranded Iranian oil to stabilize global energy markets. However, the move has been widely interpreted as tacit acknowledgment of the diminishing effectiveness of sanctions amid a deepening energy crisis. Meanwhile, China and Russia continue expanding the use of yuan and ruble in bilateral trade with Iran, now covering nearly all energy transactions.

While defense stocks on NASDAQ and in Tel Aviv have delivered short-term gains, volatility in energy markets and inflationary pressures from disrupted supply chains have inflicted deeper structural damage on Western economies. The emerging post-war order is defined by the decentralization of both military and financial power. Gulf Cooperation Council states are increasingly pursuing autonomous air defense capabilities and deeper regional integration to mitigate vulnerability to Iranian retaliatory strikes targeting civilian infrastructure and international hubs such as Dubai.

In essence, the 2026 US–Israel war against Iran has acted as a catalytic rupture in the global system. While companies like Lockheed Martin and Elbit Systems celebrate record profits, the architecture of global finance is tilting eastward. Barter systems, gold-backed transactions, and digital financial integration have formed a resilient economic fortress resistant to traditional sanctions. The world may have witnessed the end of Khamenei’s leadership, but it is also witnessing the twilight of Western financial dominance in West Asia. The contours of this new order will not be drawn in diplomatic ink, but in arms contracts and gold reserves locked deep within Eurasian vaults.

© The Times of Israel (Blogs)