On Monday, six weeks into its war with Iran, the United States imposed a naval blockade of the Strait of Hormuz. According to conventional wisdom, the war has made Tehran realize that its control of the strait constitutes powerful leverage. In this story line, the strait turned out to be Iran’s real nuclear weapon, its potent deterrent. Because Tehran could use this chokepoint to threaten global shipping, it was able to resist pressure from the world’s most powerful air force, reject Washington’s peace demands, and ultimately gain leverage over its nemesis. Iranian leaders have repeatedly touted that leverage, while analyses in Reuters, Time, and other outlets have declared the strait a formidable tool in Iran’s arsenal.
But this narrative is wrong. More than any other country on earth, Iran cannot survive a sustained closure of the strait. Before the outbreak of war in late February, 20 percent of the world’s commercial shipping may have transited the Strait of Hormuz, but over 90 percent of Iran’s seaborne trade traversed this 21-mile-wide chokepoint. Even before the U.S. naval blockade, Iran was struggling severely to move shipments vital to its own economy through the passage. A blockade will inhibit Iranian exports of all kinds—oil being the most important, but also petrochemicals—as well as imports of much of the country’s grain.
Within weeks of a blockade, the country could run out of food, as well as space to store unshipped oil, requiring it to decrease or stop production at major oil wells—an act that can damage such infrastructure permanently. By closing the strait, Iran has not established a new, meaningful source of long-term clout. Instead, it has indicated how militaries can decimate the Iranian economy and thus really exert power over the Islamic Republic.
SELF RESTRAINT
Framing the Strait of Hormuz as Iran’s trump card—a chokepoint with which Tehran can menace the world economy—gets it backward. The regime’s March closure of the strait had already severed both sides of its economic lifeline. In 2024, according to Central Bank of Iran data and U.S. Energy Information Administration estimates, hydrocarbons represented 65 to 75 percent of Iran’s total export revenue. Virtually all of these exports (approximately 92 percent to 96 percent) must pass through the Strait of Hormuz, loaded almost entirely from a single terminal at Kharg Island.
Unlike Saudi Arabia and the United Arab Emirates, which possess substantial pipeline bypass capacity, Iran has no meaningful alternative export corridor. In 2021, Iran officially unveiled the Goreh–Jask pipeline, a route from a key inland pumping station to a terminal on the Gulf of Oman with a nominal capacity of 300,000 barrels per day. In practice, however, the route was sharply constrained by unfinished infrastructure. During the summer of 2024, it loaded fewer than 70,000 barrels per day, and starting in October 2024, the terminal went dormant for roughly 17 months. Only one of three planned offshore mooring buoys is installed, and fewer than half of the 20 planned storage tanks are complete. Iran cannot reroute its way out of a Hormuz closure.
Imports are equally exposed. Iran is the largest importer of bulk grain and oilseed in the Middle East. Approximately 14 million of the 30 million tons of grain imported into Gulf markets annually are destined for Iran—all of it seaborne and all of it dependent on passage through the Strait of Hormuz. When the strait shut, grain deliveries to Iran’s primary port, Bandar Imam Khomeini, all but stopped. Iran scrambled to reroute through Chabahar on the Gulf of Oman, but that port can handle less than a fifth of Bandar Imam Khomeini’s throughput. Pharmaceutical and medical supply chains faced similar disruptions.
Nearly all of Iran’s oil exports must pass through the Strait of Hormuz.
In late March, Bloomberg and other outlets claimed that Iran was earning more than $100 million in extra daily revenue as its closure of the strait blocked rival Gulf exporters. But this assertion rested almost entirely on an accounting trick: emphasizing tanker-loading data rather than confirmed sales or receipts. The widely cited figure of approximately $139 million per day was derived from “lifting data”—a measurement of crude pumped onto ships, not crude delivered and paid for or proceeds accessible to Tehran—at two terminals, Kharg Island and Jask. Loading, delivery, and payment are distinct events in Iran’s sanctions-evasion supply chain, and conflating them produces a figure that is a ceiling, not a floor. Iran has used this playbook before: in 2019 and 2020, unable to find buyers for its oil at scale, Tehran turned its fleet into floating storage to avoid curtailing production. It pursued a similar approach in March, also motivated by the real vulnerability of Kharg Island: moving crude offshore hedges against the risk of further strikes while preserving the optics of sustained output. In early March, the amount of Iranian crude oil stored on the water hit an all-time high of roughly 190 million to 200 million barrels, precisely because loading ramped up while discharges to China’s receiving terminals declined.
Before the war, Iran was selling its crude at roughly $10 per barrel below the international benchmark, the cost of evading sanctions. The discount at which Iran was selling its oil temporarily narrowed, but in reality, the country earns a relatively small share of its sales. Intermediaries, brokers, and front companies extract additional commissions at every stage of Iran’s sanctions-evasion supply chain, eroding the margin on each barrel sold. What profit remains largely accumulates in yuan-denominated accounts in China that sanctions prevent Iran from converting or repatriating.
Before the U.S. blockade, Iran was trying to allow its own imports and exports to pass through the strait. But its ability to do so was limited. Among other difficulties—for example, the fact that sea mines do not distinguish between Iranian- and foreign-flagged vessels—Tehran’s reliance on complicated sanctions-evasion mechanisms means that ships carrying Iranian oil are not Iranian-flagged, making it hard to close the strait selectively. Iranian oil is transferred frequently between ships, and sometimes, captains and relevant authorities in Iran do not even know which tankers bear Iranian hydrocarbons.
FROM BAD TO WORSE
A full blockade will be much more devastating than Iran’s own strait closure was. It will entirely disrupt the distribution of the 1.5 million barrels of oil per day that Iran was previously loading onto tankers, costing the country approximately $276 million per day in lost export revenue and $159 million per day in imports. A blockade chokes off industrial inputs, machinery, and consumer goods.
A blockade also has the potential to damage Iran’s oil infrastructure permanently. The country has 50 million to 55 million barrels’ worth of total onshore oil storage, a capacity that, before the blockade, was already roughly 60 percent full. If the blockade is successful—and the shadow fleet Iran relies on cannot reach terminals, preventing the loading of millions of barrels per day onto tankers—this storage will fill up in a matter of weeks. After that point, Iran must slow the production of its wells. When a mature oil well reduces its production or shuts down, that can impair its infrastructure and chemistry and crimp its future productivity for good. And restarting stopped wells can make water rush in at the bottom, a process known as ‘water coning,’ which causes its own damage. Forced shutdowns could permanently destroy up to 500,000 barrels per day of production capacity, or billions of dollars of revenue every year.
Iran is also unable to supply its own fuel needs. Despite its vast oil reserves, its aging refining infrastructure produces roughly 26 million gallons of gasoline per day. But daily domestic consumption exceeds 30 million gallons—a persistent deficit that Tehran covers by importing approximately $2 billion of gasoline annually, largely by way of maritime barter arrangements routed through the United Arab Emirates. Iran’s selective Hormuz closure already nearly severed this trade: it allowed some import traffic to trickle through and rationing extended domestic fuel reserves, but fuel prices have already surged roughly 40 percent since the recent conflict began. A U.S. naval blockade will eliminate that trickle.
Moreover, Iran lacks strategic fuel reserves. According to pre-blockade estimates, Iran possessed approximately 400 million gallons of gasoline and 340 million gallons of diesel, around 12 days of national consumption and far below the International Energy Agency’s 90-day standard for net imports. After Israeli and U.S. strikes hit petroleum storage facilities, Tehran cut the limit on government-issued fuel ration cards (which cap the amount of subsidized gasoline citizens can purchase at a single visit to a filling station) from 7.0 to 5.3 gallons. The regime that claims to control the world’s most important energy chokepoint cannot keep its own gas stations supplied for two weeks.
OWN GOAL?
Tehran claims to have shown the world that it has tremendous leverage over other economies. But that narrative mistakes tactical posturing for strategic resilience. Crude being pumped onto tankers is not crude being sold. Oil nominally exported is not revenue received. And a chokepoint that Iran threatens to close is, above all, the throat through which Iran breathes.
Some may believe that the Trump administration will flinch first, abandoning its blockade in reaction to rising gas prices before Tehran agrees to its terms. But the regime was already fragile, and the Iranian population had already reached the limit of the economic pain it could tolerate. Shortly before the war began, in January, Iran experienced a round of protests that was so threatening to the regime’s survival that it resorted to killing tens of thousands of its own people to restore relative calm.
The value of the rial on the open market has already cratered, from 817,000 per dollar at the start of 2025 to over 1.5 million per dollar today. Iranian banks have begun limiting citizens’ withdrawals to $18 to $30 per day. In March, the regime issued its largest-ever banknote, a ten-million-rial bill, worth about $7. It knows it cannot endure a further dramatic collapse of the rial, a total absence of fuel, and widespread food shortages. That may be part of why Iran agreed to the highest-level engagement it has pursued with U.S. officials since the Islamic Revolution only weeks after U.S.-Israeli strikes killed the country’s supreme leader. Oil and gas make up around 25 percent of Iran’s GDP and 80 percent of its export earnings; alternative pathways besides the Strait of Hormuz cannot nearly replace the losses. The blockade makes continued resistance economically impossible. The Strait of Hormuz will likely prove to be Iran’s Achilles’ heel and undoing, not its secret weapon.
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