US or Iran: Who will win the Hormuz endurance game?

Deadlocked, dysfunctional and dangerous. That is how the Strait of Hormuz standoff is increasingly being described.

Now approaching its fourth month, the crisis off Iran's coast is marked by mutual blockades. Tehran has been charging ships up to $2 million (€1.73 million) for safe passage through the strait, while the United States has imposed a naval embargo, turning back vessels carrying Iranian oil exports.

These competing blockades have failed to deliver decisive results. Some Iranian ships continue to slip through, while several Asian shipping firms have agreed to pay tolls, despite such fees violating international maritime law.

Fragile negotiations between the US and Iran to reopen Hormuz have, meanwhile, stalled several times, sparking the risk of escalation into a wider regional conflict.

Which side will fold first?

Despite Pakistan-led mediation efforts and a proposed one-page memorandum aimed at ending hostilities and reopening Hormuz, neither side appears ready to blink first.

Dania Thafer, executive director of the Washington-based think tank Gulf International Forum (GIF), believes US President Donald Trump's on-off military threats — intended to increase its leverage over Iran — may have backfired.

"The Iranian response suggests the opposite," she told DW. "They interpret it as the US lacking the will to escalate the war."

Trump faces increasing pressure both at home and abroad to avoid further military action, with Gulf allies such as Saudi Arabia, the United Arab Emirates and Qatar urging restraint. Surging oil prices and rising domestic inflation are adding political heat ahead of the US midterm elections in November.

Iran's oil revenues depleting fast

Iran, meanwhile, is losing some $435 million per day in trade, nearly two-thirds of which comes from exports of mainly crude oil, Miad Maleki, a senior fellow at the conservative Washington-based Foundation for Defence of Democracies (FDD), estimated in April.

This means that with the US blockade stretching to 39 days on Friday, Iran's public finances have already suffered an estimated $17 billion loss. According to Maleki, this is in addition to around $144 billion in economic damage caused by US-Israeli strikes in the first weeks of the war.

Burcu Ozcelik, a senior research fellow at the London-based Royal United Services Institute (RUSI), thinks Iran may have gained "outsized leverage" through its missile attacks on shipping and Gulf neighbours, but it is now being "hit hard" by the disruption to its own oil exports.

"Despite Tehran's bluster about regime resilience, its economy is not blockade-proof," Ozcelik told DW.

Gulf states caught in the crossfire

Experts describe the standoff as a dangerous waiting game. Both the US and Iran believe they have time on their side. However, the Gulf states are far more risk-averse and economically exposed.

Their frustration with the deadlock has hardened into coordinated pressure for a diplomatic breakthrough. Various Gulf states have urged Trump to shelve plans for further strikes and give negotiations more time.

In private, they've warned that a frozen conflict will jeopardise plans to transition their economies away from fossil fuels. The Gulf states have been spending hundreds of billions of dollars on ambitious industrial and tourism projects.

They strongly support the Pakistan-mediated talks and a joint US–UN initiative to reopen the Strait without Iranian tolls or control claims.

Iran seeks regional security hegemony

As a power that sees itself reshaping the Middle East region, Iran is also using the war to push for long-term gains. GIF's Thafer thinks Iran's ambitions go well beyond war victory and it will try to seek to "flip the regional order in its favour" in the long term.

It wants "the Gulf states to expel the US and bring the region under an Iranian security framework," she told DW, adding that this approach was not in the interest of Gulf states, despite their frustrations with Washington.

While remaining cautiously optimistic about a breakthrough in talks, Washington is insisting on a full reopening of the Strait of Hormuz, an end to all Iranian nuclear enrichment activity and no sanctions relief without major concessions. US Secretary of State Marco Rubio told NATO foreign ministers gathered in Sweden on Friday that "we have to have a Plan B" if Iran does not compromise.

"The challenge is that there is no magic target that the US can hit that will immediately translate into regime surrender," Ozcelik told DW. "If civilian infrastructure is targeted, this may trigger Tehran to execute a harsher retaliation against Gulf states."

Among Iranians, the pain worsens

Tehran maintains it will stand firm, despite the growing hardship facing ordinary Iranians, which is unlikely to ease soon.

"Tehran's various proposals to extract fees for transiting the Strait of Hormuz or charging for undersea cables is indicative of the realisation by some pragmatic voices in Tehran that the Iranian economy and its people are in for a protracted period of hardship, even if sanction relief is somehow agreed," Ozcelik said.

Annual inflation in Iran has surged above 54%, with prices for some food products more than doubling. A nationwide internet blackout has lasted more than 80 days, further isolating citizens and crippling daily life.

"While Trump sees this [winning the war] as part of his presidential legacy, the Iranians view it as a matter of regime survival and the future of their country," Thafer underlined.