US sanctions and a naval blockade are squeezing Iran as its leverage over the Strait of Hormuz weakens
Six months after a conflict that pushed the Gulf towards a wider war and disrupted energy markets, Iran is facing growing economic pressure as a US-led campaign targets its oil exports, foreign currency access and financial networks, Reuters reported on Monday.
The US has combined a naval blockade with tougher sanctions in an effort to force Tehran to allow freer passage through the Strait of Hormuz, a key global energy route that normally carries about a fifth of the world’s oil and LNG supplies.
The campaign is also testing Iran’s ability to use the strait as economic and geopolitical leverage. Tehran has sought to disrupt shipping through Hormuz, but the expected global economic shock has so far been limited, according to Iranian analysts and regional sources cited by Reuters.
“Iran is losing some of the leverage it had over the Strait of Hormuz because it has been unable to close it fully,” Iranian analyst Arash Azizi told Reuters, adding that the US naval blockade was putting significant pressure on Tehran.
US pressure hits Iran’s economy
The economic squeeze is becoming increasingly difficult for Iran to withstand, the report said, adding that the measures have restricted Tehran’s access to foreign currency, imports and international financing.
Iran is also facing rising prices, weaker trade and pressure on household incomes. Shortages of important imports, including fuel and wheat, have emerged as a growing concern.
More from BusinessUS Treasury Secretary Scott Bessent has described the strategy as a combination of a naval blockade and what Washington calls the toughest sanctions in history. The US has also expanded sanctions aimed at disrupting Iran’s efforts to evade restrictions and access oil revenues.
On Friday, the US imposed sanctions on a Turkish investment bank and two subsidiaries, accusing them of facilitating financial transactions linked to Iranian oil revenues and the Islamic Revolutionary Guard Corps Qods Force. The bank has rejected the allegations and said it plans to challenge the measures.
Hormuz remains a key bargaining point
The Strait of Hormuz remains central to the standoff. Although traffic has fallen sharply, Iran has not been able to completely halt the flow of energy through the waterway.
That has weakened Tehran’s ability to impose the kind of global economic shock that could force Washington to negotiate, according to analysts cited by Reuters.
At the same time, the conflict continues to pose risks for energy markets. Oil prices rose on Monday after renewed attacks involving US and Iranian forces and shipping near Hormuz. Brent crude was up 1.25 per cent at $97.48 a barrel, while US West Texas Intermediate gained 1.34 per cent to $92.62.
Mediators are now discussing possible formulas to resolve the standoff. One proposal would involve Iran dropping demands for transit tolls while retaining the ability to charge for legitimate navigation, security or environmental services.
Such an arrangement could allow Tehran to reopen the waterway without appearing to surrender its position, while giving Washington a basis for claiming that its economic and military pressure had secured a result.
The central question, Reuters reported, is whether Iran’s economic pain will become severe enough to make compromise more attractive than continued confrontation.
