US blockade holds Iranian oil exports at zero while Gulf crude flows

Oil prices stay below $100 as Iran’s economic pressure mounts

The US naval blockade has held Iranian oil exports at zero since July, while Washington has helped Gulf Arab states move significant volumes of crude through the Strait of Hormuz despite repeated Iranian drone and missile attacks. The asymmetry is shifting the strategic calculus of the protracted Hormuz conflict, with both sides’ initial assumptions about outlasting the other now in doubt.

Maritime intelligence firm TankerTrackers.com estimated earlier this week that roughly 5 million barrels a day of crude — almost none of it Iranian — exited the Persian Gulf via the Strait of Hormuz over the previous 28 days, with another 2.5 million barrels moving via Gulf of Oman oil ports such as Fujairah in the United Arab Emirates. The combined flow represents more than 40 percent of the region’s prewar oil exports. “The Iranian blockade is more leaky than the US blockade,” said Samir Madani, co-founder of TankerTrackers.com. “The Iranians just aren’t able to shut it all down.”

Global crude oil prices remain below $100 a barrel on international markets, elevated but well below the critical threshold for the global economy. Part of that stability stems from China drawing on domestic reserves and reducing imports.

The strategic question of whether time favors Washington or Tehran remains unsettled. Iran’s leaders have long warned they cannot accept a situation in which Arab Gulf states export oil while Iran’s trade is strangled. When the US blockade was first imposed in April and reimposed in July — after a short-lived memorandum on reopening the waterway collapsed — Iranian officials estimated they could hold out for roughly five months without catastrophic economic consequences. That point is now approaching. “The assumptions of both sides have not come true, and both of them also do not have an exit,” said Vali Nasr, a professor of Middle East studies at Johns Hopkins University and a former State Department official who has been involved in informal contacts with Iran.

The economic strain inside Iran is intensifying. Iranian President Masoud Pezeshkian, who led the June negotiations with the United States alongside parliamentary speaker Mohammad Bagher Ghalibaf, said in a recent television interview that Iran’s trade has fallen between 25 and 35 percent. The rial currency is losing value rapidly, inflation is rising, and gasoline shortages have become commonplace. “Some say sanctions have no effect at all. To those people, I really don’t know what to say,” Pezeshkian said.

Real decision-making power in Tehran appears to rest with commanders of the Islamic Revolutionary Guard Corps. The country’s new official supreme leader, Mojtaba Khamenei, remains in hiding after injuries sustained in the US strike that killed his father, Ali Khamenei, in February. Revolutionary Guard chief Ahmad Vahidi and Supreme National Security Council chief Mohsen Rezaei have framed the conflict as a war of survival and are unlikely to be swayed by economic pain felt by ordinary Iranians. Esfandyar Batmanghelidj, chief executive of the London-based Bourse & Bazaar Foundation think tank, said economic deterioration can be a deliberate policy choice. “Iran’s economy is weakening. But a weakening economy can still be part of a deliberate strategy by some figures in the Iranian leadership to retain staying power in this conflict,” Batmanghelidj said. “They maintain an incredible repressive capacity, and they understand that as the economic situation gets worse, ordinary people lose their capacity to mobilize in a massive way.”

Iran’s options, according to analysts, narrow to two paths. “One option for them is to cave in. The other is to escalate in a much bigger way, to try to fight their way out of the corner,” Nasr said, suggesting escalation was more likely. “Their calculation is that even if they have to go back to the negotiating table and even if they have to make concessions, they would have to make fewer concessions if they put more pressure militarily.”

Iranian leaders are weighing the US political calendar. Ellie Geranmayeh, an Iran expert at the European Council on Foreign Relations, said Tehran is reluctant to relieve pressure on President Trump, who ordered the killing of much of Iran’s political and military leadership in February, by lowering gasoline prices ahead of the November midterm elections. “As the clock starts ticking, the viewpoint in Tehran is: ‘Why on earth would we relieve any pressure on Trump to make concessions? Let’s make him feel pain at the polls,’” Geranmayeh said.

Both sides have shown restraint that has shaped the conflict. Iran has struck tankers at sea and US bases in Bahrain, Kuwait, and Jordan, but has refrained from larger-scale attacks on Israel, Saudi Arabia, and the UAE. The United States has not bombed major Iranian cities or targeted Iran’s military and political leadership. The pause has allowed Iran to repair and rebuild military industries damaged during the 40 days of full-scale war between February and April.

A senior Gulf Arab official said the clock is ticking more loudly for the Iranians, who are under greater economic strain. “Time isn’t benefiting either side,” the official said, but the pressure on Tehran is sharper. Norman Roule, who served as the principal US intelligence community official on Iran matters from 2008 to 2017, cautioned against predictions. “Those who believe the regime is too strong, too deeply embedded in Iranian society, or too well protected by pervasive domestic security institutions to fail, should recall how similar judgments were once made about Mubarak, Ben Ali, Ceaușescu, and even the Soviet Union,” Roule said.

Iran’s Gulf neighbors hope the relative restraint persists. “For us here in the region, while we prefer a stalemate over war, we prefer a permanent cessation of hostilities over a stalemate,” the senior Gulf official said.