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Analysis Series
Analysis/0051/July/2026/London-Dialogue. 25 July 2026
Introduction
Iran’s shutdown of the Strait of Hormuz and its retaliatory actions following US attacks on southern Iranian cities can be perceived as indicators of ongoing conflict and the termination of a ceasefire. Nevertheless, this analysis posits the contrary. Tehran’s responses thus far communicate a calculated message intended to dissuade the US and augment the costs for its Gulf allies, with the objective of preventing a full-scale war and preserving its control over the Strait as leverage in future negotiations. Recognising this dynamic is essential for policymakers to mitigate risks of escalation in the forthcoming days.
Over the past twelve nights, the US has conducted extensive military strikes on southern Iran and reinstated a naval blockade of Iranian ports. These operations targeted both military and civilian infrastructure, including bridges, roads, naval control centres, and hospitals. In response, Iran has closed the Strait of Hormuz to unauthorised vessels, while the Islamic Revolutionary Guard Corps (IRGC) has launched several attacks against the US bases in Gulf countries such as Kuwait, Jordan, Bahrain, Qatar, and Saudi Arabia. Although there has been no comprehensive ground or air invasion for over four months, Iran, in collaboration with regional allies, has maintained a cautious stance. This strategic restraint signifies Tehran’s calculated approach rather than weakness, although the situation continues to develop rapidly.
What Iran actually did
Since the start of the war on February 28th, Iran has closed the Strait of Hormuz and warned that it would strike any ship that passes through the Strait. By putting pressure on the global economy and shipping industry, Iran retaliated against the attacks in a way that caused pain not only to the US but also to the global energy market. About one-fifth of global oil shipments transit through the Strait of Hormuz, which increases costs for the global trade industry and Gulf countries. On the other hand, the Houthis shut down traffic to Saudi oil ships, causing oil prices to rise. This geopolitical advantage gave Iran leverage to deter the US military campaign and bring the US to the negotiating table in April.
Restraint as a Strategy, not Weakness
Rather than reading Tehran’s behaviour as a sign of weakness or strategic collapse, this essay argues that Iran has adopted a strategy of controlled escalation. Instead of launching extensive ballistic missile strikes and other attacks against US bases in Gulf countries, Iran has inflicted economic costs on the US and its allies by disrupting the Strait of Hormuz. While the US and Israel expected this war to last days and lead to regime change in Iran, they encountered Iran’s greatest leverage, which constrained their military campaign. Hence, the Strait of Hormuz is not only a military setback for the US but also a reputational one. More than four months into the war, the US has not found a way to destroy Iran’s capability to control the Strait of Hormuz.
Since Trump announced the ceasefire was over and began striking Iranian southern coastal areas and military and civilian infrastructure, Iran has also responded by striking US bases in Bahrain, Kuwait, Jordan, and elsewhere. While the tit-for-tat strategy continues to this day, both the US and Iran are trying to control their responses by striking limited sites and infrastructure to avoid entering a full-scale war. Iran’s Foreign Minister, Abbas Araghchi, described Tehran’s posture as an “eye for an eye” strategy, involving limited retaliation matched to the harm inflicted on Iran. The closure of Hormuz gives Iran the leverage not only to impose costs on its enemies but also to transform the war from an existential conflict into a geopolitical struggle for control of the Strait.
Limits of Calibration
The strategy of controlled escalation has its own risks for Iran and the Gulf countries. The US has continued its strikes on key Iranian civilian infrastructure such as bridges, desalination plants, and hospitals. While Iran has also targeted civilian infrastructure in some GCC countries, there is a risk that this tit-for-tat strategy could produce an incident that brings both sides back into a full-scale war. Moreover, the US cannot indefinitely continue targeting Iran’s southern borders to disrupt Iran’s control over the Strait. So far, there is no end to this strategy adopted by the U.S. administration, and Iran has not given up its control over the Strait of Hormuz. This may lead to a further escalation trap, as Trump threatened that, from this point forward, any time Iran fires on a ship crossing the Strait, the US will destroy one Iranian bridge or power plant in retaliation, including targets in Tehran. In return, Iran responded that if any infrastructure gets hit by the US, they will respond in kind against regional infrastructure, especially those tied to US interests. Rather than starting an open-ended war, both sides have decided to trade matched threats to control the situation.
On the other hand, the political posture in the US continues to support the Trump administration in this war; the House adopted a $95 billion funding package to support the military campaign against Iran. This implies that Washington intends to prolong this war by funding its military assets. Hence, there is no sign of exhaustion on either side, as both continue to insist on their positions over the Strait of Hormuz. Following today’s Houthi strikes on two Saudi oil tankers in the Red Sea, the gap between “calibrated pressure” and “open maritime war” has narrowed, and this could become one of the clearest tests of Iran’s strategy of restraint.
Conclusion
Iran’s conduct during the conflict, both prior to and following the ceasefire in mid-July, demonstrates a strategy of controlled escalation and adaptation to the prevailing realities. Nevertheless, recent tanker attacks indicate that the margin for manoeuvre is diminishing. While the US Congress has approved funding for the military budget to enable the continuation of hostilities, the US presently maintains a limited stockpile of weaponry capable of sustaining this tit-for-tat strategy across the Strait of Hormuz. Additionally, there is no definitive strategy for achieving a decisive victory or concluding the conflict in the short term. The forthcoming days will reveal whether the US and Iran will return to the negotiating table or whether mutual escalation will intensify, potentially culminating in full-scale warfare.
Zeinab Nikookar
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