US-Iran war: Is Tehran losing Strait of Hormuz ‘psychological leverage’? Expert decodes where Tehran stays strong

After months into the West Asia conflict, Iran's hold on the Strait of Hormuz may now be waning, but the Islamic Republic "has not lost the ability to impose costs," an expert said, as reports suggest easing traffic on the key trade route.

The Strait of Hormuz has been no less than a weapon for Iran in its war with the United States. Its chokehold on the Strait since the war began on February 28 has disrupted global energy supplies, driving oil prices to a record high.

Tehran has clung to its leverage by threatening to strike any unauthorised oil tankers that attempt to transit the Strait of Hormuz — a key shipping route through which 20 per cent of the world's crude oil and liquefied natural gas travels.

But now, many believe that Iran’s leverage over the Strait, and grip on Gulf oil, may be weakening as September exports neared pre-war averages despite ongoing disruptions.

Strait of Hormuz ‘psychological leverage’ against US: Is Iran losing grip?

Dr Pierre Pahlavi, the deputy head in the Department of Defence Studies at Canadian Forces College and Royal Military College of Canada, told Mint that Iran is losing part of its leverage against the United States — "but it has not lost the ability to impose costs."

He noted that oil and LNG traffic through Hormuz has recovered significantly in recent weeks, even if the situation is not fully back to normal. Qatar-linked LNG vessels are once again transiting the Strait, and energy markets have shown they can adapt.

"That matters because Iran never needed to close Hormuz completely to gain leverage. It only needed to convince markets, insurers and governments that passage was unsafe. If traffic normalises despite Iranian threats, that psychological leverage weakens," Pahlavi

Tehran’s strategy: 'Turn weakness into leverage'

Pahlavi believes that Tehran’s strategy for years has been to "turn weakness into leverage" — the Strait of Hormuz in this case.

"Iran cannot match the United States conventionally, so it relies on asymmetric tools: missiles, drones, proxies, maritime disruption, ambiguity and the constant threat of escalation," the professor said.

"The Strait of Hormuz has always been one of the most powerful instruments in that toolbox," he added. "What has changed is that this instrument is becoming less decisive," he noted.

Hormuz 'is becoming less decisive'

There's a "central paradox", as Pahlavi calls it, even though he says that Hormuz "is becoming less decisive" in the US-Iran war.

Washington exerts economic pressure on Iran, while Tehran controls disruptions in the Strait of Hormuz. But prolonged disruption also hurts Iran.

"I would put it this way: Iran is losing the ability to dictate the strategic tempo, but it retains the ability to disrupt it," Pahlavi said.

The professor added, "Hormuz is both Iran’s weapon and Iran’s oxygen supply. Tehran can squeeze the artery, but it cannot do so indefinitely without damaging itself."

Iran's strength = ‘Making the game expensive’

The expert emphasised that the US' economic pressure is becoming harder for the regime to absorb.

Inflation remains very high, access to foreign currency is constrained, trade has suffered, and Iranian leaders themselves increasingly speak about economic hardship and the danger of renewed domestic unrest.

Pahlavi said while Iran is paying a growing price "to remain in the game," it does not mean that it has become "powerless."

"The regime is still standing, but it is paying a growing price simply to remain in the game. That does not mean Iran is powerless. Quite the opposite," Pahlavi said.

He analysed that Iran’s remaining strength lies in "making the game expensive, unpredictable and politically uncomfortable," even though the US "increasingly holds the stronger economic and military cards."

"And that has always been the essences of Iranian asymmetric strategy: not necessarily to win, but to prevent the stronger adversary from winning cheaply," Pahlavi.

'Weakened Iran can remain a very dangerous Iran'

He explained that a recent report indicates that Iranian commanders are preparing options for a broader retaliation if large-scale US attacks resume, potentially expanding the range of targets.

"Tehran still has missiles, drones, regional networks and the capacity to create uncertainty across the Gulf. A weakened Iran can remain a very dangerous Iran," Pahlavi.

Strait of Hormuz: What's the status?

Both Iran and the US have their blockade on the Strait of Hormuz. For ships to exit the strait, they must get pass-through permission from either of the two sides.

Those passing through the northern corridor of the Strait must seek permission from the Islamic Revolutionary Guard Corps (IRGC). Meanwhile, ships passing through the southern corridor, hugging the Omani coastline, must get clearance from US authorities.

Many existing ships have been turning off their Automatic Identification System transponders, sailing dark through the Strait. According to reports, ​Middle Eastern producers continue to export oil on tankers travelling with their transponders off.

United States military escorts also help guide and protect select commercial traffic through the waterway. Besides this, crude is also exported via alternative pipelines (Saudi Arabia and UAE).

Iran maintains it has closed the strait, and regional negotiations on agreed shipping routes have faltered.

Kpler, a ship tracker, estimates that Arab states in the Middle East shipped, on average, 17 million barrels per day (bpd) of crude oil and refined products so far in September, if flows through Hormuz and those bypassing it via pipelines are included.

That is the highest volume since February and close to the pre-war daily total of 21m, The Economist reported. Iran, by contrast, is exporting just 200,000 bpd, less than a tenth of what it shipped before the conflict began.

The increase in traffic comes as the risk of attacks on tankers remains acute in the Strait of Hormuz. Despite the building momentum, the ​United Kingdom Maritime Trade Operations agency has reported at least one attack a day in ​the Strait of Hormuz ⁠or in the Gulf of Aden since October 2.

According to Reuters, the latest data from Kpler showed that crude oil exports from the Middle East rose above pre-war levels ​in four of the seven days of the final week of September, ‌despite attacks on vessels passing through the Strait of Hormuz.

The seven-day moving average for crude ​exports was at 18.5 million bpd on October 1, data showed, as per Reuters. These include transits ⁠via the Strait of Hormuz, the Red Sea, exports from terminals and ship-to-ship transfers in the Gulf of Oman.

The number of liquefied natural gas cargoes exiting the Strait of Hormuz also rose in September to its highest monthly level since February. Bloomberg reported on October 5 that shipments of liquefied natural gas (LNG) through the Strait of Hormuz extended a rebound that began in September.

While outbound traffic in September climbed to the highest level since the Iran conflict began in late February, flows remain more than 75 percent below pre-war levels, the report added.

On September 20, Admiral Brad Cooper, head of US Central Command, said in a video message that oil and LNG shipments through the Strait of Hormuz in the past two weeks reached the highest level in six months.