Proponents of the war with Iran have taken recent increases in crude-oil flows through the Strait of Hormuz as proof that the U.S. strategy is finally working. President Trump is so confident in this that he recently rejected a seven-day plan, set forward by Iran’s foreign ministry, to end the war and open the strait. The United States is “winning tremendously,” Trump boasted.
A confused administration is conflating tactical dominance with strategic success. Seven months into a war that its planners suggested would last four to five weeks, the Trump administration’s understanding of Iran remains deeply flawed, and increases in oil exported through the strait don’t mean that the U.S. is close to ending the conflict on its terms.
The president’s self-assurance doubtless derives in part from his reported belief that this conflict will come down to which side is able to endure economic pain the longest. The countdown clock on Iran’s economy appears to be ticking ever faster: The U.S. Navy’s blockade on Iranian ports has been ruthlessly effective, as, to a lesser extent, has the Treasury Department’s Operation Economic Outcast, announced in August as “an unprecedented campaign to sever every remaining economic lifeline sustaining the Islamic Republic of Iran.”
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Iran’s economy was in bad shape before the war. Now it is in deep crisis. The Iranian rial is trading at a record rate of more than 2.5 million to a dollar, versus a prewar exchange rate closer to 1.2 million. Year-over-year food inflation was more than 125 percent in late August, according to Iranian-government statistics. A country accustomed to cheap, plentiful gasoline now has severe shortages, and its government is progressively scaling back subsidies. The International Monetary Fund projects that the Iranian economy will contract by 5.4 percent in 2026, and the U.S. administration has assessed, as Treasury Secretary Bessent said early last month, that Iran is in a “death spiral,” desperate to make a deal.
The administration appears to believe that the clock on American economic pain, meanwhile, has been slowed by Iran’s decreased ability to close or even significantly constrain maritime traffic through the Strait of Hormuz. Iran’s grip on that choke point, through sea mines and attacks on tankers, had reduced the daily transit of oil from 20 million barrels a day before the war to fewer than 3 million a day by March. But in late August, the U.S. military claimed a “major milestone”: It had cleared the strait’s transit routes of mines. A mid-September CENTCOM press statement said that the strait was “open for transit.”
Regional oil exports rose significantly in September. According to a JP Morgan assessment that circulated on social media late last month, regional exports rebounded to just 11 percent below prewar levels. The maritime intelligence company Kpler reported the September daily average of oil through the strait at 10 million barrels; an additional 6 million barrels left the area by means of ports and pipelines that avoided the strait. A late-September headline on CNN seemed to capture the general assessment: “Iran has lost considerable leverage in the Strait of Hormuz. It can’t go on like this forever.”
One reason for the resumption of oil flows is that Saudi, Emirati, Qatari, and Kuwaiti oil companies, working with the U.S. Navy, have started pulling off risky transfers that evade the Iranian anti-ship missiles and drones threatening the strait. Shuttle tankers inside the waterway turn off their transponders, load up with oil, and, watched over by U.S. Navy fighter jets and attack helicopters, leave the strait by hugging the Omani coast. Once in safe waters, they transfer their crude cargo to larger supertankers for onward transport.
But the new status quo in the strait is neither sustainable nor scalable. Ship-to-ship transfers are dangerous and expensive, and they rely on active U.S. military operations, which currently involve two Navy aircraft-carrier strike groups already in the region and a third on its way.
Meanwhile, transit through the strait remains dangerous. At least eight tankers have been attacked in the week ending October 5, and the multinational Joint Maritime Information Center, based in Bahrain, still assesses the threat for strait passage as “severe.” According to the United Kingdom Maritime Trade Organization, strait traffic remains 75 percent below pre-conflict levels. The global supply of crude and refined products trails demand, and regional exports of refined products are at only 58 percent of prewar norms. As the Kpler trade-risk analyst Ana Subasic recently told The New York Times, the passage of more ships and oil through the region than earlier in the war “doesn’t mean we’re seeing a normalization of flows.”
Trump could well be right in believing that Iran’s economic pain is increasing faster than America’s. But the Iranian regime, engaged in a fight it believes to be existential, will tolerate pain levels much higher than those acceptable to a U.S. administration mired in an unpopular war. The soaring price of gasoline and diesel could be a problem for Republicans in the midterm elections next month. By contrast, the Iranian regime, with its extensive and tested infrastructure of popular repression, has shown its willingness to slaughter its citizens en masse and is not calibrating its policies to the ballot box.
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The Trump administration seems not to realize that Iran’s leaders—more militarized and hard-line than those the U.S. and Israel killed at the start of the war—are operating on the assumption the United States is dead set on toppling the Islamic Republic. They see compromise under pressure as hastening, not delaying, their own destruction. In response to intensifying U.S. economic pressure and a worsening strategic situation, they are far likelier to escalate militarily than to capitulate.
Shortly after the Vietnam War ended, an American colonel talking with his Vietnamese counterpart is reported to have asserted, “You never defeated us on the battlefield.” The Vietnamese colonel allegedly thought about it, then replied, “That may be so, but it’s also irrelevant.” The same could be true with Iran. Yes, the U.S. has destroyed huge swaths of Iran’s military. Yes, it is crippling Iran’s economy and immiserating ever more of its citizens. And yes, it is getting more oil out of the region than earlier in the war. But none of that is getting America much closer to a win.
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