Iran war shifts focus to control of Strait of Hormuz

Tehran, Iran. A war launched on February 28 as a joint U.S.-Israeli campaign against Iran has shifted into a contest over control of the Strait of Hormuz. The conflict has killed thousands and caused extensive damage across the Middle East.

Shift in the conflict

The initial campaign sought to weaken Iran militarily, eliminate Tehran’s nuclear programme, reduce the strength of its proxy network and potentially topple the government.

It has since become focused on the Strait of Hormuz, a narrow waterway that carries about one-fifth of global oil and liquefied natural gas supplies.

Energy market disruption

Competing Iranian and U.S. blockades have significantly reduced shipping through the strait over the past six months, disrupting energy markets and increasing costs for economies worldwide.

Crude prices have not risen as sharply as expected, largely because of substantial global inventories, lower Chinese imports and higher oil production outside the Gulf. Brent crude remains at about $90 per barrel, around 25% above its pre-war level.

The market buffers that initially limited the energy shock are now largely depleted.

Iranian resilience

U.S. efforts to restrict Iranian oil exports, Tehran’s main source of revenue, have reduced shipments by about 85% from pre-war levels. Exports fell to 250,000 barrels per day in August, contributing to inflation and worsening economic hardship.

The Iranian government has remained in place despite the killing of Supreme Leader Ayatollah Ali Khamenei in an Israeli air strike on the first day of the war. It has adapted to the conflict and strengthened its position.

Iran has not established military dominance in the region, but has demonstrated its ability to impose economic costs on its adversaries through influence over Hormuz, including periodic attacks and threats against tankers.