The ongoing conflict between the United States and Iran has entered a phase of uncertain stalemate, with analysts warning that the current impasse could have far-reaching consequences for global stability. Despite diplomatic efforts by Iranian Foreign Minister Abbas Araghchi, who recently travelled to Pakistan, there remain no plans for direct negotiations with Washington. Experts suggest that if the deadlock persists, it could weaken Western interests while inadvertently strengthening Tehran's authoritarian regime.
The Stalemate and Its Immediate Effects
President Donald Trump announced late Tuesday that the US would "hold our attack" on Iran pending a deal, a significant reversal after previously dismissing ceasefire calls and threatening to target civilian infrastructure. Trump insists he is under "no time pressure" to finalise an agreement, prioritising a "good deal for the American people." However, a substantial gap remains between both parties on core issues. The US Navy continues to blockade Iranian vessels in the Strait of Hormuz, a countermeasure to Iran's closure of the strategic waterway. Analysts estimate this blockade costs Tehran as much as $435 million per day.
Experts note that Iran has demonstrated a higher tolerance for such pressure than outsiders anticipate. While the Iranian economy will undoubtedly suffer from a protracted conflict, the status quo may paradoxically bolster the regime. The Pentagon now expects it will take approximately six months to clear mines from the Strait, prolonging the crisis.
Impact on Iran's Economy and Regime
The Strait of Hormuz has been a powerful tool for Iranian leverage since the conflict erupted on 28 February. The waterway normally handles a fifth of global oil and liquefied natural gas supplies. Its closure has drained global inventories, driving up prices and generating widespread support for a swift resolution. Trump argues that the status quo is unsustainable for Iran, claiming it is "losing 500 million dollars a day" due to the blockade.
Miad Maleki, a senior fellow at the Foundation for Defense of Democracies (FDD), assesses that Iran's daily losses amount to $435 million, as over 90 per cent of its $109.7 billion annual trade passes through the Strait. Before the blockade, Iran generated around $139 million daily from oil revenue alone. The blockade also halts exports of approximately $54 million in petrochemicals and $79 million in non-oil goods daily, while disrupting $159 million in imports, leading to shortages of essentials and rising prices.
Longer term, Iran risks irreversible damage to its oil reserves if forced to shut wells due to storage capacity constraints. Such shutdowns can render oil inaccessible, causing billions in annual losses. Andreas Krieg, a senior lecturer at King's College London, describes the status quo as "not sustainable in any normal commercial sense," though both sides may use it as short-term leverage. He notes that Iran "can tolerate this kind of pressure longer than most outsiders would like to admit," but Trump is "partly right" that the country suffers "real material damage."
However, Krieg warns that a prolonged impasse could allow the Iranian regime to reconstitute itself faster than expected, even amid economic weakening. "The latest internal picture suggests that surviving this confrontation has already given the regime a renewed sense of legitimacy among its own base, and the IRGC is becoming even more central to decision-making," he explains. While a very long impasse would erode Iran's economy and increase domestic strain, in the near to medium term, the IRGC can tolerate this status quo because it reinforces the idea that hard power and repression preserve the system.
Global Economic Consequences
The closure of the Strait of Hormuz continues to reverberate through the global economy. UK inflation rose to 3.3 per cent in the year to March, driven by higher fuel prices, according to the Office for National Statistics. Dr Valentin Boboc, senior economist at the Institute of Economic Affairs, notes that the UK, having diversified its LNG portfolio away from the Gulf, is more insulated from physical supply shocks than its EU counterparts. However, LNG imports remain a key exposure, though moderate inflation and stable monetary policy may help the UK weather the shock better than the EU.
The EU energy commissioner assessed Wednesday that the status quo costs the bloc $500 million daily, warning of "very difficult months, or possibly even years" ahead. In the US, inflated petrol prices cost consumers an additional $300-450 million each day, according to Patrick De Haan of GasBuddy. Americans have collectively spent around $17.6 billion more on gasoline since the conflict began. Dr Boboc says the costs for the US are "mainly political," with domestic pump prices a "critical liability" ahead of the November Midterm elections. Gulf allies may also grow restless over the lack of a long-term maritime security solution.
The Strait of Hormuz also facilitates large movements of fertiliser, and its continued closure will affect global food supplies. The US imports around 13 per cent of its fertiliser from the Gulf, while India imports 25 per cent. The UN reported Thursday that higher fuel and fertiliser prices from the crisis will push 30 million people back into poverty worldwide.
Military and Political Dimensions
Martin Navias, co-author of "Tanker Wars: The Assault on Merchant Shipping During the Iran-Iraq Crisis," agrees that the pressure on the US is primarily political-economic, not military. He argues that Iran should not be able to keep the Strait closed for long in the face of American power. The IRGC has enhanced its anti-shipping capabilities since the 1980s, but the US Navy could escort ships through the Strait if political will existed. Navias finds it "incomprehensible" that the US ended up in this position, calling the closure a failure of planning and the war "catastrophic from an American-Western point of view."
Britain and France are still attempting to convene a multinational coalition to reopen the Strait but will not intervene until a "sustainable ceasefire agreement" is reached. Countries that can bypass the Strait may emerge as competitive alternatives in the short term, while affected Gulf states build infrastructure to avoid future shocks. The Financial Times reported in early April that oil and industry executives in the Gulf are considering major investments in new pipelines to bypass the Strait. Qatar, Bahrain, and Kuwait are most exposed, with fewer alternatives. These projects may cost billions and take years, but would reduce vulnerability to external events, especially since Iran has demonstrated it can still weaponise the Strait.
Long-Term Implications
Beyond material losses, immaterial consequences may shape the world. Krieg notes that "Washington looks less able to guarantee free navigation than it claims, feeding a wider perception across the Gulf that the US security umbrella is indispensable but no longer fully reliable." This loss of confidence pushes partners towards hedging, diversification, and more autonomous planning, potentially reshaping geopolitical alliances.
