Will Soaring War Risk Send Civilian Ammunition Prices Higher?

President Trump signaled on Sunday that Operation Epic Fury could extend for four weeks, shifting our focus beyond the likely decline of certain air-delivered munition stockpiles to the question of whether a prolonged conflict begins tightening small-arms ammunition supplies and spilling over into civilian markets.

“It’s always been a four-week process. We figured it would be four weeks or so. It’s always been about a four-week process so – as strong as it is, it’s a big country, it’ll take four weeks – or less,” Daily Mail newspaper quoted Trump as saying.

War risk fears and the massive scale of Operation Epic Fury are set to drain critical missile stockpiles used by the THAAD, Patriot, and SM-3 systems. As we noted earlier on Sunday, this suggests the U.S. military may have to draw down on critical missile and bomb stockpiles.

Beyond missiles and bombs, the possibility of a four-week conflict may spark governments into a buying frenzy of small-arms ammunition, rebuilding stockpiles, and funding allies, thereby tightening the consumer market. Then there is retail: whenever there is a risk of war, riots, or Democrats trying to take away their guns, some consumers always go into a buying panic of ammo and guns.

At the start of the Russia-Ukraine war in early 2022, demand for 5.56×45mm NATO ammunition, commonly used in the AR-15 and M4/M16 platforms, surged, briefly pushing prices higher in the early days of the conflict. Prices then trended lower despite the war due to expanded manufacturing capacity and shrinking demand from retail post-Covid boom.

With 5.56 ammo prices now hovering around .40 cents per round after roughly 18 months of supply-demand rebalancing, the key question is whether conflict in the Middle East will drive military demand higher and tighten the end market.

5.56 Ammo Price Index via BlackBasin (online ammo price aggregator):  

.40 cents per round certaintly seems like a floor.