Tehran pins hopes of surviving blockade on 120m barrels of oil destined for China

As the pink of dawn coloured the sky last Tuesday, a group of US marines descended from a helicopter on to the deck of a container ship in the Arabian Sea. They searched the Comoros-flagged Blue Star 3, releasing the vessel after confirming it will not visit Iranian ports. The US military said this was the American blockade in action: 45 ships turned round so far, with the aim of blocking vessels anywhere from reaching Iran and bringing its economy to its knees.

So far, it has not worked. The US blockade has yet to force Iran back to the negotiating table and there are few signs Tehran is willing to reopen the Strait of Hormuz. Iran kept it closed last week, even as 28 of its ships slipped through the US blockade by turning off their tracking systems, according to Lloyd’s List Intelligence, and two covertly loaded oil near Kharg Island. There were only 46 other crossings of the strait last week, based on shipping data from S&P Global Market Intelligence.

The ripple effects of the closure have included raised prices for flights and food in Europe, schools closed in Pakistan to save energy and mass protests in the Philippines over rising fuel costs. The UAE has said it will leave Opec, presaging an oil price war, and the UN has said tens of millions of people could be pushed into poverty, while 45 million more risk starvation because of fertiliser shortages if the crisis continues.

In public, at least, the leaders at the centre of it all appear content with the stalemate. Iran’s reclusive new supreme leader, Ayatollah Mojtaba Khamenei, declared that “a new chapter for the Persian Gulf and the Strait of Hormuz is unfolding”. Asked if he was willing to maintain the blockade, even perhaps for months more, Donald Trump told reporters: “The blockade is genius, the blockade has been 100% foolproof... Now they have to cry uncle… Just say: “We give up.’”

The war on Iran is two months old but stuck in limbo. A shaky ceasefire punctured by Israeli attacks on southern Lebanon remained in place last week as Iran delivered a list of terms to Pakistani mediators, chief among them an offer to reopen the strait if the US was willing to postpone nuclear talks until later. Trump rejected it and threatened to resume bombing.

Tehran says negotiations are impossible until the US ends its blockade: its foreign minister, Abbas Araghchi, said Washington needs to end its threats and “expansionist approach”.

European leaders are desperately seeking an end to the mounting economic pain. Britain and others are preparing to start mine-clearance operations as soon as a deal is agreed.

An isolated Trump has lashed out at critics of the war, ordering the removal of 5,000 US troops from Germany and taking to social media to attack its chancellor, Friedrich Merz, who said Washington was being “humiliated” by Iranian negotiators and lacked an exit strategy. The US defence secretary, Pete Hegseth, also attacked his critics when questioned by Congress last week, despite admitting the war has already cost more than $25bn and faltering when asked about the rationale for starting it after the US destroyed Iranian nuclear facilities last year

Iran’s leaders appear determined not to blink. Ahmad Vahidi, head of Islamic Revolutionary Guard Corps, has been pushing a hardline position, including keeping control of the strait. Despite this, the White House believes the US blockade will soon force talks, not least because Iran will soon run out of oil storage.

Without space to store crude, it could be forced to stop pumping oil altogether, so Tehran has possibly cut production to buy time, said Homayoun Falakshahi of the commodities intelligence company Kpler. But Iran's ability to withstand the blockade may hinge more on whether it can offload about 120m barrels of oil now floating east of Singapore that it hopes to sell to China.

That would provide approximately 10 weeks of import revenues, essential to pay its forces and stabilise a limping economy that was already fragile when Iranians took to the streets last December, Falakshahi said. Without income from this sale, the regime teeters further towards economic collapse and risks more discontent. The White House calculates that if Iran cannot sell this oil, it will be forced to resume talks. If the strait stays shut, oil prices could soar past $200 (£147) a barrel, according to Ken Wattret of S&P Global Market Intelligence. That could tip western European economies, including Britain, into recession and slow the economy in the US. Even if it reopens tomorrow, he said, the impact will last months

The Iranians and the White House are telegraphing that a return to military strikes could break the impasse; Trump was reportedly briefed last week on military options in Iran. A White House spokesperson did not deny the briefing took place, or that Trump told aides to prepare for months more of the blockade.

For now, the White House appears unwilling to negotiate in earnest yet keen to claim victory, even with the global economy on a glide path to disaster and Trump’s approval ratings falling.

Alon Pinkas, a former Israeli consul general in New York, said Trump’s actions showed he “either doesn’t understand or he doesn’t care”.

Photograph by AFP via Getty