The Blockade on Hormuz Is the Right Move, And Iran Will Break First

Tehran does not have time on its side.

President Trump is turning the tables on Iran’s economic warfare via its thievery racket in the Strait of Hormuz.

U.S. naval forces have officially begun enforcing a blockade on all maritime traffic entering and exiting Iranian ports in the Strait of Hormuz. The move follows the collapse of marathon peace talks in Islamabad, where Vice President JD Vance reported that the Iranians “chose not to accept our terms.” Iran’s response, for those who follow the regime closely, was rather predictable: bluster, threats, and a parliamentary spokesman posting a map of American gas prices near the White House with the taunt: “Enjoy the current pump figures.”

The critics are already out in force. They’ll cite $100+-a-barrel oil, rising inflation, pain at the pump. They’re not entirely wrong. There will be temporary pain. But the question about this strategy’s success comes down to who breaks first. And on that question, the answer is rather certain: Iran will.

The USS Michael Murphy has helped to remove sea mines placed by Iran’s Islamic Revolutionary Guard Corps (IRGC)

The numbers tell the story.

Geopolitical Analyst Miad Maleki, a senior fellow at the Foundation for the Defense of Democracies, laid out the arithmetic this weekend: a U.S. naval blockade imposes approximately $435 million per day in combined economic damage on Iran — $276 million in lost exports, $159 million in choked imports. That’s $13 billion a month, drawn from a regime already struggling to make payroll.

Ship traffic in the strait

As Maleki points out, over 90 percent of Iran’s $109.7 billion in annual trade transits the Persian Gulf. Oil and gas account for 80 percent of government export earnings and nearly a quarter of GDP. Kharg Island alone — which handles 92 percent of Iran’s crude exports — generates approximately $78 billion a year in energy revenue. All of it sits inside the blockade zone.

Cargo ships in the Gulf, near the Strait of Hormuz, as seen from northern Ras al-Khaimah. Reuters

Iran’s much-touted bypass, the Jask terminal, is largely a paper facility. Only ten of its twenty planned storage tanks were built, leaving effective throughput at around 70,000 barrels per day against a design capacity of one million. There is no meaningful escape route. Iran holds roughly 50-55 million barrels of onshore storage, and at a production surplus of 1.5 million barrels per day, available storage fills in approximately 13 days. After that, Iran must begin shutting in wells, which will cause permanent reservoir damage that cannot be quickly reversed even if a deal is struck.

Iran’s rial has collapsed from roughly 42,000 per dollar to over 1.5 million — wiping out the savings and purchasing power of ordinary Iranians. The central bank recently resorted to printing a 10 million rial note just weeks after introducing the 5 million rial note. Official inflation runs at 47.5 percent. Food inflation hit 105 percent by February. Rice prices are reportedly up sevenfold.

As Fortune reported Sunday, an insider close to the Iranian establishment described the economy as the regime’s “Achilles heel,” with authorities now worried about their basic ability to make payroll. Without sanctions relief, the money simply isn’t there. That fear is not hypothetical, as the recent protests in Iran were largely sparked by the rial’s collapse, and it spread to more than 200 cities.

Yes, the blockade of Hormuz may hurt us too. Oil topped $100 a barrel again on Sunday. American consumers will feel this. But the United States was already absorbing damage from Iran’s blockade, which has bottled up roughly 20 percent of the world’s oil supply since February, while Iranian tankers transited freely and Tehran extracted $2 million tolls from vessels seeking passage, funneling that revenue to the IRGC.

The blockade flips the asymmetry. Instead of Iran collecting rent while the global economy bleeds, Iran becomes the most negatively impacted party immediately.

A vessel in the Strait of Hormuz off the coast of Oman’s Musandam Governorate on Sunday. Reuters

The liberal Brookings Institution’s Robin Brooks made the strategic case as far back as March: “The U.S. can implode Iran’s economy by shutting down its oil exports. That might open up the Strait of Hormuz a lot faster than anything else.” He also argued that crude prices might actually fall if the blockade is seen as ending the war quickly, because China, which buys most of Iran’s oil, would have every incentive to lobby Tehran into accepting terms.

Iranian officials are already calling the blockade an act of piracy. But consider what Iran has been doing for the past six weeks: mining international shipping lanes, launching 21 confirmed attacks on merchant vessels, and holding a fifth of the world’s energy supply hostage to extract a better nuclear deal. The United States is not escalating. Rather, we are evening the ledger.

Both sides will feel this. But the Trump Administration has the massive balance sheet and the strategic wherewithal to outlast a regime running 47 percent inflation, no meaningful foreign exchange reserves, an oil storage clock ticking toward zero, and a population that was already in the streets fiercely protesting the extremist Islamic government that rules over them.

The blockade removes Tehran’s primary bargaining chip while accelerating an economic emergency that was already in motion.

Iran will almost certainly break first. We don’t have all the time in the world, but the United States is infinitely better positioned to play chicken with Iran over the Strait of Hormuz.