Strait of Hormuz standoff enters fourth month with US and Iran under economic strain

The Strait of Hormuz standoff is approaching its fourth month, marked by mutual blockades that have failed to deliver a decisive result. Iran charges ships up to $2 million (€1.73 million) for safe passage through the strait, while the United States enforces a naval embargo turning back vessels carrying Iranian oil exports. Some Iranian ships continue to slip through, and several Asian shipping firms have agreed to pay tolls despite such fees violating international maritime law.

Iran is losing an estimated $435 million per day in trade, nearly two-thirds of which comes from exports of mainly crude oil, according to Miad Maleki, senior fellow at the Foundation for Defense of Democracies (FDD), who made the estimate in April. With the US blockade stretching to 39 days on Friday, Iran's public finances have suffered an estimated $17 billion loss, Maleki said. This is in addition to around $144 billion in economic damage caused by US-Israeli strikes in the first weeks of the war. Annual inflation in Iran has surged above 54%, with prices for some food products more than doubling. A nationwide internet blackout has lasted more than 80 days, further isolating citizens and crippling daily life.

"Despite Tehran's bluster about regime resilience, its economy is not blockade-proof," Burcu Ozcelik, senior research fellow at the London-based Royal United Services Institute (RUSI), told DW. Ozcelik said Iran may have gained "outsized leverage" through its missile attacks on shipping and Gulf neighbors, but it is now being "hit hard" by the disruption to its own oil exports.

US President Donald Trump faces pressure from Gulf allies Saudi Arabia, the United Arab Emirates and Qatar urging restraint. Surging oil prices and rising domestic inflation are adding political heat ahead of the US mid-term elections in November. Gulf states strongly support Pakistan-mediated talks and a joint US–UN initiative to reopen the Strait without Iranian tolls or control claims. Washington insists on a full reopening of the Strait, an end to all Iranian nuclear enrichment activity and no sanctions relief without major concessions. US Secretary of State Marco Rubio told NATO foreign ministers gathered in Sweden on Friday that "we have to have a Plan B" if Iran does not compromise.

Dania Thafer, executive director of the Washington-based think tank Gulf International Forum (GIF), believes Trump’s on-off military threats may have backfired. "The Iranian response suggests the opposite," Thafer told DW. "They interpret it as the US lacking the will to escalate the war." Thafer added that Iran's ambitions go beyond war victory and seek to "flip the regional order in its favor" in the long term. "They want the Gulf states to expel the US and bring the region under an Iranian security framework," she said.

Ozcelik noted that Tehran's proposals to extract fees for transiting the Strait or charging for undersea cables indicate "the realization by some pragmatic voices in Tehran that the Iranian economy and its people are in for a protracted period of hardship, even if sanction relief is somehow agreed." Thafer underlined: "While Trump sees this [winning the war] as part of his presidential legacy, the Iranians view it as a matter of regime survival and the future of their country."