Iran's Leverage Erodes as US Blockade Takes Hold

The conventional wisdom that Iran has emerged victorious in the war with the US and its allies may be premature. The six-month conflict has been a contest of leverage and endurance, and the balance of power is shifting in favor of the US.

The US military has reimposed its blockade on Iranian ports and sanctions on Iran's oil trade since mid-July, effectively blocking Iranian oil shipments and helping to protect commercial ships transiting the Strait of Hormuz. This has resulted in an effective blockade on Iranian oil shipments, with global shipments recovering and energy prices remaining remarkably stable.

The statistics paint a bleak picture for Iran: its economy is expected to contract by more than 5% this year, with inflation approaching 70%. The value of the Iranian currency has fallen sharply, and prices for basic goods have soared. An estimated one million jobs disappeared during the first three months of the war alone.

Iran's ability to sustain the conflict depends on its remaining resources, but its leverage is dissipating rapidly. If Iran loses control of the Strait of Hormuz, its negotiating power will evaporate. The US has a clear objective: enforcing the blockade and facilitating commercial traffic. Until then, this will be the new status quo.