The main economic flash point in the US campaign against Iran has been the Strait of Hormuz, which carried roughly 20 million barrels of oil a day before the war. That choke point no longer dominates the global energy market the way many feared it would.
According to US government figures, the United States, Saudi Arabia, and the other Gulf states can now move about 15-16 million barrels per day. Roughly 10 million leave on tankers through the strait itself, often under US naval protection and sometimes with transponders off, so the true volume likely exceeds what public maritime tracking shows. Another 5-6 million barrels move by air and, more significantly, through pipelines built or expanded since the war began.
Saudi Arabia’s East-West Pipeline now transfers 7 million barrels a day, much of it reaching the Red Sea port of Yanbu. The UAE’s Habshan-Fujairah line, which empties into the Gulf of Oman outside the strait, is running near its ceiling of 1.5-1.8 million barrels a day, with a parallel line planned to expand it further.
These routes, plus limited trucking and other workarounds, haven’t fully replaced prewar volumes, but they’ve offset much of the loss. The bottom line is undeniable: Oil is still leaving the Gulf in large quantities.
The clearest evidence the system is working is the price of oil itself. As of mid-August 2026, Brent and WTI crude are trading at $85-$90 a barrel – far below the $150-plus levels many analysts warned would trigger a downturn like the Great Depression. Prices spiked early in the conflict, briefly topping $110-$120, but have since settled well short of those catastrophic forecasts. The market has absorbed the shock without panic.
Other developments have helped close the gap left by lost Hormuz volumes: Chinese oil demand has softened, and Venezuelan production climbed to about 1.2 million barrels a day this past July, nearly all of it bound for export. Between alternative routes, protected tanker movements, weaker Chinese demand, and rising Venezuelan output, the shortfall has been nearly covered.
That success doesn’t mean the war is over. What keeps US President Donald Trump from forcing a decisive blow to the Iranian regime isn’t Hormuz – it’s the persistent threat of Iranian missile and drone strikes on Gulf oil infrastructure.
Iran and its proxies have hit or threatened refineries, storage tanks, and export terminals across Saudi Arabia, the UAE, Kuwait, and Bahrain, including key nodes like Fujairah, Habshan, Ras Tanura, Yanbu, and Abqaiq.
A single successful strike on a major processing plant or terminal could still send prices sharply higher, which is why Washington and its partners have moved carefully – degrading Iranian capability while keeping Gulf production going and protected.
Iran's shrinking ability to project power abroad
Still, the strategic picture is clear: Iran can no longer use the strait as leverage over the global economy. Its ability to project power beyond its borders keeps eroding under US and allied strikes, while inflation and internal dissent pile pressure on a regime with fewer external options by the week.
Iran’s usable foreign exchange reserves are so limited that Trump’s oil export embargo hit hard and fast. It choked off Iran’s ability to import rocket fuel, drone motors, and other urgent supplies from China, and disrupted money transfers to Iran’s proxies – Shi’ite militias in Iraq, Hezbollah in Lebanon, and the Houthis in Yemen.
At home, the block on Iran’s oil exports has sent the rial into free-fall: A US dollar now costs 1,500,000 rials in Tehran, up from 50,000 a year ago. The inflation is hitting salaried workers hardest – soldiers in the Artesh, the IRGC, government ministry employees, staff of the bonyads, and Basij paramilitary forces. Basic goods have become unaffordable, and by month’s end many of these families are surviving on little more than subsidized bread.
Now, the new US effort, “Economic D-Day,” is aimed at total financial isolation of Iran through unprecedented sanctions and enforcement. The strategy involves aggressive secondary sanctions against any company, bank, or nation still trading with Tehran, especially major oil buyers like China and India.
The US is deploying its navy and federal agencies against unregistered tankers, underground banking networks, and crypto exchanges to push Iranian crude exports to zero, while pressuring regional centers like the UAE to cut off transactions entirely, thus forming a coordinated blockade meant to collapse the Iranian regime’s revenue.
Taken together, the economic squeeze of the regime and the newly announced measures make the regime’s collapse look increasingly inevitable, even if the timetable is uncertain and further Iranian strikes on Gulf energy assets remain likely.
But the fundamentals have shifted: The Strait of Hormuz is no longer the decisive battleground Iran once hoped it would be. Oil (not Iranian) keeps flowing, prices remain contained, and the strategic initiative rests with Washington and its partners. What remains is the harder work of managing escalation risk on Gulf infrastructure while Tehran’s options continue to narrow and the pressure inside Iran keeps building.
Hormuz was Iran’s best card, and it’s already been played and lost. What remains is a regime running out of money, running out of allies, and running out of time.
The writer is head of the US office at Acumen Risk Ltd., a risk-management firm.