The Case for a Stalemate With Iran

Six months in, the U.S. and Israeli war on Iran has settled into a stalemate. Neither Washington nor Tehran can achieve a clear military or diplomatic victory. Instead, the two sides have found themselves locked in a mutual blockade of oil and other shipments through the Strait of Hormuz and into Iranian ports, with no obvious way to change the status quo. The costs of accommodating the other side’s demands to end the stalemate are so high, and the costs of the stalemate sufficiently low, that a mutual blockade has emerged as the least bad option for both the United States and Iran for the foreseeable future.

This situation may not be ideal for Washington, but it avoids both defeat and escalation. It also works to the United States’ advantage over time: as the blockade drags on, Tehran’s position is likely to weaken faster than Washington’s. The United States has its own ample oil supplies to draw from, whereas nearly the entirety of Iran’s oil exports—and therefore much of its hard currency—has been cut off. An ongoing blockade that gradually ratchets up pressure on Iran could make Tehran more flexible in negotiations with the United States, leading to a compromise that Washington could accept. The challenge is to ensure that Tehran does not choose to respond to its worsening position by escalating its attacks and starting another regionwide conflict that ensnares the United States.

U.S. policy should focus on avoiding the most disruptive contingencies, especially Iranian escalation, and settle for maintaining dual blockades indefinitely. If Iran is unwilling to concede, Washington can slowly erode the Iranian economy and military while ensuring that Tehran cannot rebuild the strong regional position it enjoyed before the Hamas attack on Israel on October 7, 2023. At this stage, maintaining the current U.S. position is the most effective way of fighting—and winning—this war.

BEST OF THE WORST

In June, Washington and Tehran agreed to a memorandum of understanding to first establish a cease-fire and open the Strait of Hormuz and then to sign a permanent deal within 60 days to resolve long-term issues in the bilateral relationship, including restricting Iran’s nuclear program and removing U.S. and international sanctions and other financial penalties on Iran. But it fell apart before a final deal could be reached largely because Iran failed to fully open the strait. With diplomatic solutions going nowhere, both Washington and Tehran are now hoping that the economic pressure each can put on the other—and in the case of Iran, on the global economy—will force its counterpart back to the negotiating table on terms that will resolve the blockade in its favor.

A blockade comes with costs for Washington. Keeping the strait closed is raising gas prices and increasing inflation in the United States, an especially sensitive issue as the November midterm elections approach. Prices could rise further if Iran finds a way to limit the millions of barrels of oil that bypass its blockade and are transported through the Strait of Hormuz daily. And the United States has already used up many critical munitions and strained its troops in the region by keeping the war going.

But the operation has been relatively affordable compared with past conflicts. The United States lost thousands of lives and spent trillions of dollars in Afghanistan and Iraq, whereas the ongoing conflict with Iran has resulted in 18 American service members killed and has likely cost tens of billions of dollars. (As of mid-July, estimates ranged from $37.5 billion to over $100 billion.) Most important, the mutual blockade has the advantage of being more palatable to political leaders in Washington than any of the alternative options.

A full U.S. withdrawal from the Strait of Hormuz without gaining concessions from Iran, including ending its blockade, would be unthinkable even for the unorthodox Trump administration. It would allow Iran to tout a complete victory and give the regime in Tehran a powerful psychological boost that would undo much of the progress that the United States and Israel made in the past three years decimating Iran’s network of regional proxies. And it would probably not lead Iran to reopen the Strait of Hormuz for free passage—Tehran is likely to insist on installing some kind of tolling system in perpetuity. With Washington in retreat, Iran could also revive and rebuild its nuclear program, which would be a stunning failure for the United States.

Military escalation is an even less appealing option for Washington. The Iranian regime has already survived a massive bombing campaign; a new, even more aggressive offensive could take out much of Iran’s remaining military capabilities and its energy, transportation, and communications infrastructure, but such an offensive could not guarantee that Tehran would accept American terms on opening the strait or curtailing its nuclear program. Having already weathered so many attacks aimed at diminishing its power, the remaining Iranian leadership, which learned to tolerate hardship in the Iran-Iraq War in the 1980s, is unlikely to be cowed by further aggression. Moreover, it could retaliate by targeting Gulf Arab states’ infrastructure and depleting remaining U.S. air defense missiles, which would raise the costs of the war to the United States and its partners.

The other option for the United States is a land invasion aimed at forcibly ousting the Iranian regime. This would require a military effort likely as large as the 1991 Desert Storm operation, which involved more than 500,000 American troops. Such an operation risks the significant loss of American life, huge costs to Iranian civilians, and disorder across the entire region. The Trump administration, which has consistently derided prior U.S. “forever wars” in the Middle East, appears to have ruled this option out months ago.

Washington’s calculation, then, is that a blockade is preferable to any other alternative. The blockade serves as a slow-moving pressure campaign either to bring Iran back to the negotiating table to agree to something along the lines of the compromise outlined in the June memorandum of understanding or to gradually weaken the Islamic Republic’s economic and military strength and eventually its internal stability. This type of campaign has a mixed historical record, but it worked in 1988 when, after eight years of war with Iraq and a failed naval confrontation with the United States in the Persian Gulf, Iran ended hostilities by withdrawing its troops from Iraq.

So far, the costs of the mutual blockade have been tolerable for the United States. Despite six months of an almost continuous Gulf oil and natural gas embargo by Iran, the global economy is suffering minimal damage. In July, five months into the war, the International Monetary Fund revised its 2026 global GDP growth estimates downward only 0.1 percentage point—from 3.1 percent to 3.0 percent—“with limited evidence of second round effects” of the oil shock. American gasoline prices have risen about 38 percent over the course of the war, but the country’s economic growth rate remains steady. Deeper shortages could push gas prices higher, but because the United States now produces more oil than it consumes, Washington could intervene in the market to keep prices down. In this context, the United States can continue the mutual blockade at relatively low cost.

STUCK IN THE MIDDLE WITH YOU

The leaders of the Islamic Revolutionary Guard Corps have held on to power so far—and seem poised to stay in power indefinitely. They have shifted Iran to a crisis economy, tightening their grip on the population and protecting their military programs at the expense of the Iranian people. They do not want to concede to terms like those in the memorandum of understanding because doing so would cost them their last major weapon—the ability to close the strait—and make them face possible new restrictions on their nuclear program. (In the June memorandum, for example, Tehran only vaguely committed to dilute its highly enriched uranium, which is Washington’s priority in reducing the Iranian nuclear threat.)

The United States, however, has time on its side. If Washington maintains its blockade through November’s election, the strategic value of the closure to Iran will decline as flights and tourist travel drop from summer highs and as countries improve their coping strategies by finding alternative energy suppliers. And in Iran, the effects of the blockade on its oil exports are already being felt. Inflation rose to over 80 percent year-over-year in August, and the value of the currency has been dropping rapidly. Iran’s leadership may be hardened by war, but the country’s economy will eventually need oil exports and reduced sanctions to survive. The economic pressure has pushed some political leaders, including President Masoud Pezeshkian, to suggest a return to the terms of the memorandum of understanding with the United States.

But if the pressure on the economy makes Tehran desperate, Islamic Revolutionary Guard Corps leaders who ultimately call the shots could choose to escalate the situation rather than seek compromise. Iran could crack down further on any U.S. efforts to squeeze ships through the strait, including by laying new mines (as it was preparing to do on August 30, prompting a U.S. strike), and it could attempt to shut down Saudi and Emirati pipelines that bypass the strait and channel millions of barrels of oil daily from the Gulf. Alternatively, in addition to its current sporadic attacks, Tehran could launch a major military offensive, using its remaining stocks of missiles and drones to destroy much of the Gulf Arab states’ infrastructure, damage U.S. bases and ships, and even strike Israel. If such an attack succeeds, Gulf Arab states’ need to save their huge oil infrastructure investments could knock them out of their informal American coalition or force Washington to accept Iranian terms on reopening the strait.

If Iran escalated in this way, the Trump administration would have to retaliate militarily despite its reluctance to do so. According to foreign military sources, the United States and Israel had planned just such a massive air offensive in early August that would have been far larger and more damaging than earlier bombings. But Washington canceled the attack in part because of Gulf Arab states’ concerns about potential retaliation.

Any of the scenarios is possible. Iran has traditionally chosen to escalate, but given how hard its economy and its proxies have been hit since 2023, it is possible that it is willing to negotiate rather than surrender. As the stalemate drags on, and if Washington does not budge, Iran’s leadership thus will eventually have to decide which of the three available options it wants to pursue: negotiating a compromise similar to the memorandum of understanding, raising the stakes with aggressive action, or prolonging the blockade while finding itself in an increasingly disadvantageous position.

WINNING BY STALEMATE

When the United States and Israel launched their attack on Iran in February, they could not foresee that six months later the result would be a double blockade of the Strait of Hormuz. Israeli and American leaders likely thought they would have destroyed the regime or forced Tehran to compromise. But now, given the alternatives, embracing the stalemate is the best possible option for the United States. The United States was unable to quickly defeat Iran, but it remains better able to absorb the costs of the current blockade as Iran’s economy slowly buckles under the strain.

The biggest risk to an ongoing stalemate is if Iran decides to escalate. Washington needs to warn Iran of the severe consequences it would face if it were to launch a large offensive or restart its nuclear program. Only American power can deter Iran. Washington thus should play to a stalemate but be ready to respond with a truly devastating counteroffensive if Iran raises the stakes. With the U.S. position getting stronger over time, Iran’s only real advantages lie in pushing back just enough to avoid triggering such a U.S. response.

A stalemate accompanied by the right threats can be a strategy for not only winning the war but also for solidifying and building on the essential gains Washington has made in its larger three-year conflict with Iran and its proxies. It will not transform the Middle East on its own, but by putting Iran in a weaker position, it could encourage much-needed restraint from Tehran.

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