Iran losing its Leverage

No, Iran is not winning: In Act IV of the war, it’s losing its leverage in Hormuz

The arc of this six-month conflict has proceeded in four acts.

• Act One began with intensive airstrikes on February 28 and lasted through six weeks of high-intensity military operations.
• Act Two began with the April 7 ceasefire and negotiations, culminating with the June 17 MOU signed by Trump and Iran’s president, Masoud Pezeshkian.
• Act Three began weeks later when Iran chose once again to target commercial ships in the Strait of Hormuz, leading to another tit-for-tat military exchange.

Since mid-July, the US has reimposed its military blockade on Iranian ports and sanctions on Iran’s oil trade. In parallel, the U.S. military has worked tirelessly to clear shipping lanes and help protect commercial ships transiting the Strait.

The result has been an effective blockade on Iranian oil shipments, with global shipments recovering and energy prices remaining remarkably stable. Bloomberg reported this week that oil flows through the Strait have recovered to 2/3 of pre-war levels.

That means pressure is now compounding on Iran, and not the US. And if Iran loses its ability to hold the Strait hostage, its leverage dissipates rapidly.

According to the International Monetary Fund, Iran’s economy is expected to contract by more than 5% this year, with inflation approaching 70%. The value of Iran’s currency has fallen sharply. Prices for basic goods have soared. An Iranian Labor Ministry official recently estimated that more than one million jobs disappeared during the first three months of the war alone.

• But Act Four seems different. The US military has a clear objective as outlined this week by the commander of CENTCOM, Admiral Brad Cooper. It is enforcing the blockade on Iran and facilitating the movement of commercial traffic.

And that status quo — perhaps for the first time since the war began — now favors Washington, not Tehran.

Analysis by Brett H. McGurk