US-Iran War Enters Trench Warfare Phase Over Strait of Hormuz Control

The US-Iran war has become a stalemate six months in, with neither side willing or able to back down. The conflict has hardened into a struggle over control of the Strait of Hormuz, a waterway used for one-fifth of global oil and liquefied natural gas supplies.

A joint US-Israeli effort aimed to cripple Iran militarily and eliminate its nuclear program, but it has evolved into a narrower focus on energy markets. Duelling blockades have sharply curtailed traffic through the strait, disrupting energy markets and imposing mounting costs on global economies.

Brent crude remains around $90 per barrel, roughly 25% above its pre-war level. Market buffers that cushioned the initial energy shock are now largely exhausted, a worrying sign. The risk might be expected to spur the Trump administration to resolve the crisis, but neither side has demonstrated a convincing strategy to break the deadlock.

The US is trying to restore energy flows through Hormuz and lower fuel prices at home, but its options for bringing down domestic fuel prices are narrowing by the day. The conflict has exposed the real bottleneck in the global energy system, refining capacity. Around a fifth of Middle Eastern refining capacity is offline due to war damage or export disruptions.