The United States has declared its readiness to uphold a naval blockade against Iran indefinitely. As ceasefire negotiations falter, the U.S. also plans to escalate economic pressure on the region.
This deadlock has led to a sharp decline in global oil supply and inflamed regional tensions significantly.
Since late February, Iran has effectively blockaded the strait, responding to assaults from both the US and Israel. In a controversial move, Iran has insisted on collecting tolls for passage through this once freely navigable waterway. The persistent attacks have shattered the April ceasefire agreement and violated a memorandum of understanding signed in June.
Speaking to reporters, US Defense Secretary Pete Hegseth emphasized that the American military possesses the capability to sustain its naval presence in the region, enforcing the blockade that has dealt a significant economic blow to Iran.
“The United States Navy is equipped to maintain an indefinite blockade by rotating our ships,” Hegseth stated during his visit to Panama. “We have done so continuously, and we will persist in this strategy.”
US treasury secretary Scott Bessent said on Thursday that the US planned to inflict more financial damage on Iran.
“Watch this space for more announcements coming next week because we are going to apply measures like have never been seen in the history of economic isolation on a country,” he said in an interview on Newsmax’s Rob Schmitt Tonight program.
With a tentative June deal to end the war in tatters, Iran has sought to exert leverage on the US in return by controlling the Strait of Hormuz.
It has attacked some vessels trying to transit the strategic waterway, through which a fifth of the world’s oil and liquefied natural gas travelled before the war began in February.
Two vessels from the state-owned Abu Dhabi National Oil Company were attacked transiting the strait on Friday, UAE state news agency WAM reported. The United Arab Emirates government condemned it as an Iranian attack.
US President Donald Trump is under pressure at home to end a war that is deeply unpopular, with high fuel prices dragging down his approval ratings and potentially eroding his party’s control of congress in midterm elections in November.
Trump has repeatedly said the US has “total control” over the strait, prompting Iranian denials. Iran has said it would not allow the waterway to reopen until its conditions are met. These include removing economic sanctions and releasing frozen Iranian assets.
Shipping traffic through the Strait of Hormuz fell to eight vessels on Tuesday, compared with a 10-day average of about 12 vessels, and 130 to 140 ships before the war.
The US lifted its blockade of Iran’s shipping and ports for a month in mid-June but has since reimposed it, cutting off Iran’s primary source of hard currency and compounding earlier losses from wartime strikes on its energy infrastructure.
The US previously said it would lift the Iranian blockade once Iran and Oman, which sit on either side of the strait, reach an agreement to restore commercial shipping.
Dwindling oil supply
Trump has also repeatedly threatened to escalate military strikes and “hit Iran hard”, although he has thus far resisted deploying ground troops or seizing strategic islands and bombing desalination plants. Earlier this week, Trump suggested he would rely on economic means, rather than military action.
The US has tightened economic sanctions against Iran and other individuals and entities that it says are helping it procure weapons, but the pressure campaign has failed to bring Iran back to the negotiating table.
Stress is mounting on the global economy. The International Energy Agency on Wednesday forecast that global oil supply would fall by 4.3 million barrels per day, or around 4 per cent, this year.
Just a month ago, the agency had forecast a drop of 3.7 million barrels per day.
Oil prices settled down more than 2per cent on Thursday after a week of gains, as investors focused on signs of weaker global demand and a sharp increase in US crude inventories.
But reports that Yemen’s Iran-backed Houthis had targeted a Saudi Aramco refinery with drones unsettled the market, renewing concerns about a widening regional war.
Global economists have forecast a sharp drop in global growth as a result of the war, and potentially a swing into recession in some areas, warning that the impact will worsen if the war is not ended soon.
Hegseth declined to comment on a question about whether, in retrospect, it was a mistake to declare a ceasefire in April, a move that ended high-tempo bombing of Iran in exchange for peace negotiations that have failed to resolve the conflict.
“I’m never going to comment on that. We’re doing exactly what we need to, to ensure that Iran never has a nuclear weapon,” Hegseth said.