The Business of War: Who’s Profiting From Iran, What Ukraine Could Teach Washington, and Why Israel’s Economy Keeps Climbing

By Jose E. Navarro | The Navarro Report  |  July 24, 2026

The Iran war is nearing the two-week mark of a fresh round of escalation, with Tehran now targeting U.S. allies across the region — the latest chapter in a conflict that began February 28, 2026, when American and Israeli strikes killed Iran’s Supreme Leader and Iran responded by closing the Strait of Hormuz, the passage that carries roughly a fifth of the world’s oil and a fifth of its liquefied natural gas. Brent crude spiked past $120 a barrel in the opening days; European gas prices doubled. Nearly five months later, the fighting has settled into a grinding, expensive routine for Washington, a lucrative one for a narrow set of companies, and an unlikely opportunity for Ukraine.

The defense sector’s windfall

Wall Street treated the war as a buying signal almost immediately. Lockheed Martin’s stock has climbed roughly 40 percent since the first strikes; Northrop Grumman jumped as much as 6 percent in a single day of trading after its B-2 stealth bombers were used in the operation, adding billions to its market value before markets even opened the next morning. RTX, maker of the Patriot missile-defense system, has gained more than 60 percent over the past year. Analysts at Bernstein described the pattern bluntly, telling clients that heavy use of American, Gulf and Israeli interceptors has created urgent restocking demand that should push both Lockheed’s and RTX’s share prices higher regardless of how the war itself resolves.

The demand is not hypothetical. Congressional sources say the U.S. burned through $5.6 billion in munitions in just the first two days of the conflict, and the Pentagon has reportedly depleted roughly a quarter of its precision-interceptor stockpile in less than two weeks of intense fighting. The administration is now moving to spend $153 billion in previously approved military funding this year and has floated an additional $500 billion request for next year’s defense budget. Defense executives met at the White House to discuss ramping up production, a meeting analysts expect to convert quickly into new contracts for the largest Pentagon suppliers. European contractors are riding the same wave: Germany’s Rheinmetall projects 40 to 45 percent sales growth in 2026, and Italy’s Leonardo says it is on a path of sustained growth, both citing demand tied to the Iran war layered on top of years of Ukraine-driven rearmament.

Oil producers have profited too. Some estimates put U.S. producers’ windfall from the Hormuz-driven price spike at more than $60 billion, even as the same spike has raised gasoline and heating costs for American households and stoked the inflation fears rattling broader equity markets.

Ukraine’s opening

The munitions strain that is fueling defense-sector profits is also the reason the Pentagon has started paying closer attention to Ukraine. Defense Secretary Pete Hegseth told senators this year that he personally approved sending additional U.S. military personnel to Ukraine to study how its forces fight, describing drone dominance as central to modern warfare. The interest is practical: a Ukrainian-made interceptor drone can cost a few hundred dollars, next to several million for a single Patriot interceptor, and Ukraine has spent more than four years refining low-cost ways to shoot down the same Iranian-designed Shahed drones now complicating U.S. and allied air defense in the Middle East. Ukrainian officials reportedly offered Washington that battle-tested counter-Shahed technology earlier this year specifically to help protect American forces in the region; the offer was initially turned aside before the Pentagon began reconsidering.

Kyiv is now negotiating drone-cooperation agreements with at least seven NATO countries, covering not just aircraft sales but technology transfer, joint manufacturing, radar systems, ground stations and the operational knowledge accumulated over years of combat. A draft U.S.-Ukraine defense memorandum under discussion would let Ukraine export military technology to the U.S. and build drones through joint ventures with American manufacturers — notable given that one Ukrainian producer plans to build more than 3 million low-cost first-person-view drones in 2026, compared with roughly 300,000 built in the U.S. in 2025. If American and allied forces adopted more of that cost structure, it could ease the very sustainment crunch now driving Pentagon budget requests skyward — the defense-industrial equivalent of buying a fire extinguisher instead of rebuilding the house.

Israel’s economic reaction

For Israel, the growth curve just keeps bending upward. The Defense Ministry announced in June that 2025 arms exports hit a record $19.2 billion, up nearly 30 percent from the prior year and the fifth consecutive annual record; more than half of those deals exceeded $100 million each. Missile, rocket and air-defense systems remain the core product line, and buyers have broadened well past Israel’s traditional European base — sales to the Asia-Pacific region nearly doubled year over year, and the Abraham Accords partners, the UAE, Bahrain and Morocco, now account for a share of exports that has quadrupled since 2023. Defense Ministry officials attribute the surge directly to the Israeli military’s recent operational record, arguing that combat performance across Gaza, Lebanon, Syria and Iran functions as the best marketing a weapons system can get.

The broader Israeli economy has largely tracked the defense sector’s momentum. Economists cited by CNBC expect growth of about 3 percent in 2026, citing low unemployment, strong demand for Israeli technology and defense exports, and a windfall from two blockbuster 2026 acquisitions — Google’s $32 billion purchase of cybersecurity firm Wiz and Palo Alto Networks’ $25 billion purchase of CyberArk. That said, the boom is not friction-free: a depreciating shekel is cutting into defense contractors’ margins by as much as 20 percent in some deals, and the government reportedly owes its own defense industry substantial sums tied to the 2026 defense budget even as export orders pile up.

None of this is entirely new. After the U.S. killed Iranian General Qasem Soleimani in January 2020, Northrop Grumman rose roughly 9 percent over the first four trading days of that year, Lockheed Martin about 6.5 percent, and Raytheon around 3 percent — a preview of the same reflex the market is now applying at a larger scale. What has changed is the size of the check: the combined single-day gain in shareholder value for the top three contractors after this year’s strikes has been estimated at $25 billion to $30 billion, a figure roughly equivalent to the Pentagon’s entire annual spending on military family housing and quality-of-life programs. Public polling has consistently found that most Americans oppose the war, even as its costs show up in gas prices and grocery bills — a disconnect that has drawn scrutiny in Congress, where several lawmakers have faced questions over personal stock purchases in the same defense names in the weeks before this year’s strikes began.

The through-line

Three governments, three very different postures toward the same war, and three economies moving in the same direction: up, for the companies and countries positioned to arm it. Israel’s export machine and the American defense primes are both feasting on demand that a grinding war reliably produces; Ukraine, meanwhile, has quietly built the one asset in this conflict that isn’t measured in barrels or interceptors — hard-won knowledge of how to fight an air war against Iranian-designed drones cheaply and continuously. The open question, for Washington in particular, is whether it keeps paying premium prices to restock exquisite, expensive interceptors, or starts buying the cheaper lessons Ukraine has already learned the hard way.