Tehran is wagering that its sanctions‑hardened economy can endure the crisis in the Strait of Hormuz longer than its adversaries. Meanwhile, Washington is grappling with soaring oil costs, renewed inflationary pressures, and mounting risks of a global recession.
Deadlocked, dysfunctional, and perilous: That is how the standoff in the Strait of Hormuz is increasingly characterized.
Now entering its fourth month, the crisis off Iran's coast is defined by reciprocal blockades. Tehran has been levying fees of up to $2 million (€1.73 million) on vessels for secure transit through the strait, while the United States has enforced a naval embargo, intercepting ships transporting Iranian oil exports.
These opposing blockades have not yielded clear victories. Some Iranian vessels continue to evade interception, and several Asian shipping companies have consented to pay the tolls, even though such charges contravene international maritime law.
Fragile negotiations between the US and Iran to reopen Hormuz have repeatedly stalled, heightening the danger of escalation into a broader regional confrontation.
Which side will yield first?
Despite mediation efforts led by Pakistan and a proposed one‑page memorandum aimed at ending hostilities and reopening Hormuz, neither party appears prepared to back down.
Dania Thafer, executive director of the Washington‑based think tank Gulf International Forum, believes US President Donald Trump's intermittent military threats—designed to strengthen his hand against Iran—may have had the opposite effect.
"Iran's reaction suggests the contrary," she told DW. "They view it as the US lacking the resolve to intensify the conflict."
Trump is under mounting pressure both domestically and internationally to avoid further military engagement, with Gulf allies such as Saudi Arabia, the United Arab Emirates, and Qatar urging restraint. Surging oil prices and rising domestic inflation are adding political strain ahead of the US midterm elections in November.
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Iran's oil revenues depleting fast
Iran, meanwhile, is losing approximately $435 million (about €375 million) per day in trade, nearly two‑thirds of which stems from exports, primarily crude oil, Miad Maleki, a senior fellow at the conservative Washington‑based Foundation for Defense of Democracies, estimated in April.
This means that with the US blockade stretching to 39 days as of Friday, Iran's public finances have already sustained an estimated $17 billion loss. According to Maleki, this is on top of roughly $144 billion in economic damage from US‑Israeli strikes during the war's initial weeks.
Burcu Ozcelik, a senior research fellow at the London‑based Royal United Services Institute, believes 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.
"Despite Tehran's bluster about regime resilience, its economy is not blockade‑proof," Ozcelik told DW.
Gulf states caught in the crossfire
Experts describe the standoff as a risky waiting game. Both the US and Iran believe time is on their side. However, the Gulf states are far more risk‑averse and economically vulnerable.
Their exasperation with the deadlock has solidified into coordinated pressure for a diplomatic resolution. Several Gulf states have urged Trump to set aside plans for additional strikes and allow more time for negotiations.
Privately, they have cautioned that a frozen conflict will endanger their efforts to shift economies away from fossil fuels. The Gulf states have been investing hundreds of billions of dollars in ambitious industrial and tourism projects.
They strongly back the Pakistan‑mediated talks and a joint US–UN initiative to reopen the strait without Iranian tolls or control claims.
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Iran seeks regional security hegemony
As a power that sees itself reshaping the Middle East, Iran is also leveraging the war to pursue long‑term advantages. Thafer of the Gulf International Forum believes Iran's ambitions extend well beyond military victory and it will attempt to "flip the regional order in its favor" over the long term.
It wants "the Gulf states to expel the US and bring the region under an Iranian security framework," she said, adding that this approach is not in the interest of Gulf states, despite their frustrations with Washington.
While remaining cautiously optimistic about a breakthrough in talks, Washington is insisting on a full reopening of the Strait of Hormuz, 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.
"The challenge is that there is no magic target that the US can hit that will immediately translate into regime surrender," said Ozcelik. "If civilian infrastructure is targeted, this may trigger Tehran to execute a harsher retaliation against Gulf states."
Among Iranians, the pain worsens
Tehran maintains it will stand firm, despite the growing hardship facing ordinary Iranians, which is unlikely to ease soon.
"Tehran's various proposals to extract fees for transiting the Strait of Hormuz or charging for undersea cables is indicative of 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," Ozcelik said.
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.
"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," said Thafer.
Edited by: Srinivas Mazumdaru
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