What the US naval blockade would mean for Iran’s economy

Across Iran’s political spectrum—from senior officials to hardline lawmakers—the failure of the 21-hour negotiations has been framed not as the end of talks but as a moment to test leverage, particularly around the Strait of Hormuz and Washington’s newly announced naval blockade.

Speaker Mohammad-Bagher Ghalibaf, who was part of the Iranian delegation in Islamabad, placed responsibility for the breakdown squarely on Washington while leaving room for further engagement.

In a post on X, he wrote that distrust toward the United States stems from “the experiences of the previous two wars,” adding that Washington failed to convince Tehran while leaving open whether the Americans could “earn our trust.”

President Masoud Pezeshkian struck a softer tone, signaling conditional openness to diplomacy.

“If the American government abandons its totalitarianism and respects the rights of the Iranian nation, ways to reach an agreement will certainly be found,” he wrote on X.

All about Hormuz

The Strait of Hormuz—through which roughly a fifth of global oil flows—has rapidly emerged as both a bargaining chip and a symbolic red line in Tehran’s messaging.

President Donald Trump announced a US naval blockade aimed at preventing vessels from entering or leaving Iranian ports and intercepting ships that pay transit fees to Tehran.

US Central Command said the blockade would begin Monday and apply to vessels of all nations calling at Iranian ports.

Iran’s Islamic Revolutionary Guard Corps Navy warned that any escalation in the waterway could have severe consequences, cautioning that “any miscalculation will trap the enemy in deadly whirlpools in the strait.”

Hardline voices have increasingly framed control of the waterway as a source of revenue and national prestige.

“From now on… we will have a third source of income called the Strait of Hormuz,” lawmaker Amir-Hossein Sabeti said at a pro-government rally.

University professor and commentator Foad Izadi suggested in a post on X that future confrontation could transform the strait into Iran’s “most important source of income,” while hinting that alternative export routes could become targets.

‘Taboo broken’

Some Iranian analysts warn that the US blockade risks pushing both sides closer to military confrontation.

Political analyst Ruhollah Rahimpour described the move as “beating the drums of war,” arguing that Washington is effectively testing Iran’s economic lifeline.

“Iran’s economy is locked into the chokepoint of Hormuz, and now Trump has decided to test this lock with a hammer,” he said. “In such a situation, either the lock opens, or the whole door will be torn off.”

Reformist voices, however, emphasized the historic nature of the talks themselves.

Former lawmaker Mahmoud Sadeghi described the direct engagement as “a major taboo-breaking moment,” noting the significance of Iranian and American officials meeting at such a level after nearly half a century.

Journalist Ahmad Zeidabadi similarly argued that failure in Islamabad “does not mean a definite failure of diplomacy,” warning that a return to full-scale war would produce an “irreversible catastrophe for all parties.”

Former Vice President Mohammad-Ali Abtahi also struck a cautious tone, writing that “47 years of open hostility cannot be resolved in a few hours.

“I don't see anything from the Trump administration that indicates an interest in absolutely getting rid of this regime,” Pollack said, referring to the prospect of regime change.

“The initial rhetoric about regime change is just gone. In fact, the president is constantly talking about how wonderful this leadership is, that it's better, that it is more reasonable than we had at the beginning, which I just see as absolutely fantastical.”

US-Iran talks were held in Pakistan on Saturday but ended without a deal.

In those discussions, there was little mention of the people of Iran. Just weeks ago, politicians across Washington and beyond spoke openly about them. Now, as diplomacy and de-escalation dominate the headlines, that focus appears to be fading.

For Pollack, the greatest concern is not the escalation of war but the survival of the regime.

“This war ending with this leadership in control of this regime—that's about the worst outcome that I can possibly imagine,” Pollack told the Eye for Iran podcast.

For many inside Iran, that fear is deeply personal.

The concern is not simply that the regime remains in power after absorbing military strikes. It is that a wounded but surviving leadership could emerge even more brutal, convinced it has weathered the storm and defeated outside pressure.

Pollack described the current leadership as “more willing to use force, both against their own people and against the people of the Middle East.”

Since the 40-day war, several political dissidents have been hanged in Iran. Arrests and crackdowns—with the regime’s repressive apparatus taking over the streets—are fueling fears that any pause in military confrontation may be followed by intensified domestic repression.

Ceasefire or a pause

Pollack was skeptical that the current lull in fighting represents any meaningful end to the conflict, saying it was a “partial ceasefire” at best.

“Both sides have agreed to a ceasefire, [but] it's not at all clear that they've agreed to the same ceasefire,” he said, arguing that the disconnect reflects a deeper strategic problem: each side believes it has leverage.

According to Pollack, Tehran appears convinced it has demonstrated an ability to absorb punishment while still imposing political and economic costs on Washington, particularly through threats to oil markets and shipping routes.

That perception matters because survival itself can be transformed into regime messaging.

A leadership that emerges from war still standing can portray endurance as victory—both to its internal security forces and to the wider region.

The people of Iran risk being forgotten again

For Iranians who had hoped strikes on the regime’s security apparatus might open space for political change, the ceasefire raises a different fear: that the world’s focus will once again shift away from them.

That concern was central to Pollack’s warning.

He said Iran had been in a “pre-revolutionary state,” with the public one spark away from another mass uprising. But a bad ending to the war could shatter that fragile sense of possibility.

“I worry that the outcome of the war may cause Iranians to simply decide that there is no opportunity to overthrow this regime,” he said.

That may be the deepest consequence of all.

“I don't see a good outcome that includes having this regime still in place,” Pollack said.

You can watch Eye for Iran on YouTube or listen on any podcast platform of your choosing

The delegation which held lengthy talks with the US team in Islamabad on Saturday includes not only Parliament Speaker Mohammad-Bagher Ghalibaf and his political allies but also Ali-Akbar Ahmadian, Secretary of the Defence Council, and more moderate technocrats such as Central Bank of Iran Governor Abdolnaser Hemmati.

However, the presence of Mahmoud Nabavian—a hardline parliamentarian known for his staunch opposition to negotiations with the West—has generated particular surprise.

Nabavian, a cleric affiliated with the ultra-conservative Paydari (Steadfastness) Party, has for years denounced figures like Mohammad-Javad Zarif and the relatively moderate government of Hassan Rouhani as “traitors” for pursuing the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action.

His inclusion in the delegation appears to be interpreted as a calculated move by Ghalibaf. By bringing a vocal critic of negotiations into the process, he may be attempting to share responsibility for the outcome and pre-empt future criticism from hardline factions that wield significant influence within Iran’s political and military structures.

With figures like Nabavian involved, any eventual agreement—or failure to reach one— is less easily attributed to a single political camp.

According to political activist Hossein Shirzad, the delegation’s structure suggests a broader objective beyond traditional diplomacy. “The composition of the delegation … indicates that negotiations are aimed at presenting a ‘political business plan’ to Donald Trump’s representatives for Iran’s future,” he wrote on X. He added that “the discussions are likely about the quality of an agreement, not the agreement itself.”

Shirzad also claimed that “the issue has already been resolved behind the scenes. Ghalibaf wants to prove that he has the expertise and executive capability to manage Iran and control the remaining structure. He is seeking personal and factional guarantees.”

Mojtaba's green light

Despite the significance of the negotiations, Iran’s new supreme leader has not issued an explicit public endorsement.

However, in a written message marking the fortieth day after his father’s death, Mojtaba Khamenei referred to the “announcement of the decision to negotiate with the enemy” and called for public mobilization to influence the outcome, remarks that many interpret as implicit approval of the negotiation process.

He also referenced verses from Surah Al-Fath in the Quran, alluding to the Treaty of Hudaybiyyah—a peace agreement between Prophet Muhammad and his adversaries in Mecca. In Islamic tradition, this treaty is seen as a strategic move that reduced conflict and ultimately strengthened Muslims despite their weaker position at the time.

Such symbolic references carry strong weight among the Islamic Republic’s ideological base.

Ghalibaf and his rivals in the conservative camp

Divisions and rivalry within Iran's conservative camp remain pronounced. On one side stands Ghalibaf and his pragmatic allies—often described as technocratic conservatives—who advocate negotiation from a position of strength. They reject ultimatums but view diplomacy as a rational tool for managing tensions and reducing external pressure, with indirect talks seen as the most viable path under current conditions.

For Ghalibaf, success in these talks could significantly bolster his political standing after multiple failed bids for the presidency over the past two decades. A diplomatic breakthrough could help secure his position as a leading figure in Iran’s future political landscape.

On the other side are more radical conservatives, including Saeed Jalili and factions such as the Paydari Party, who have consistently opposed any engagement with the United States. These groups have framed past agreements as “surrender” and continue to adopt a hardline stance.

Jalili has remained notably silent in recent days, fueling speculation in political circles that under the new leadership he may have been replaced in his role at the Supreme National Security Council by Ali Bagheri-Kani, also present alongside the delegation.

Hardline opposition beyond political elites

Hardline opposition extends beyond political elites into public discourse. In street protests and on social media, critics have condemned any potential agreement as a sign of “humiliation” and “betrayal of the leader’s blood.”

In one widely circulated video, a speaker denounced Ghalibaf’s trip to Pakistan for talks with JD Vance, prompting crowds to chant “Hayhat Min al-Dhilla” (“Never accept humiliation”)—a phrase historically attributed to Imam Hussain on the Day of Ashura.

State media also reflects this tension. While negotiations are widely understood to require leadership approval, some broadcasters have continued to voice dissent.

For instance, a presenter on IRGC-affiliated Ofogh TV questioned the rationale for talks, asking: “If the Zionist regime has violated the ceasefire, based on which commitment should we remain silent and go negotiate? Three of Iran’s ten conditions for negotiation have been violated.”

Even so, other voices within state media have pointed to historical precedents, noting that several Shia Imams engaged in dialogue or cooperation with their adversaries, suggesting that negotiation, in itself, is not incompatible with ideological principles.

In a statement, the department said Secretary of State Marco Rubio had terminated the green card status of Seyed Eissa Hashemi, Maryam Tahmasebi and their son, who are now in the custody of Immigration and Customs Enforcement pending removal.

“Eissa Hashemi is the son of Masoumeh Ebtekar, also known as “Screaming Mary,” the infamous spokeswoman for the Islamist militants who stormed the US Embassy in Tehran in 1979 and held 52 Americans hostage for 444 days,” read the statement.

The department said the three entered the United States in 2014 and were granted permanent residency in 2016 through the Diversity Immigrant Visa Program.

It also said Rubio had recently revoked the legal status of relatives of former IRGC commander Ghasem Soleimani and of the daughter and son-in-law of former Iranian official Ali Larijani.

Rubio had earlier terminated the lawful permanent resident status of the niece and grandniece of former IRGC commander Qasem Soleimani, leading to their arrest by federal agents last week.

Hamideh Soleimani Afshar and her daughter are now in the custody of US Immigration and Customs Enforcement, according to the State Department.

The department alleged that Soleimani Afshar had publicly supported Iran’s government and the Islamic Revolutionary Guard Corps while living in the United States, including through social media posts praising attacks on US forces and promoting regime messaging.

The statement also said Rubio earlier terminated the legal status of Fatemeh Ardeshir-Larijani, daughter of Ali Larijani, along with her husband Seyed Kalantar Motamedi, both of whom are no longer in the United States and are barred from reentry.

There is little clarity about the terms of the ceasefire. Neither Washington nor Tehran refers to it as a formal agreement, and the absence of guarantees, enforcement mechanisms or an effective mediator underscores how fragile it may be.

President Donald Trump has declared victory, Tehran has described the outcome as a “historic achievement,” and Israeli Prime Minister Benjamin Netanyahu has offered only partial support for the arrangement.

The complexity of the war, including the involvement of Arab states across the Persian Gulf and multiple proxy actors, makes a comprehensive settlement difficult for now.

The view from Washington

The United States entered the war with multiple objectives: degrading Iran’s nuclear program, weakening the “Axis of Resistance,” and in some quarters even raising the possibility of regime change. At its core, however, the goal was to alter the regional balance of power by weakening Iran’s ability to threaten Israel and its neighbors.

According to American officials, roughly 13,000 targets were struck during the campaign, including missile infrastructure, naval facilities and parts of Iran’s air-defense network. Much of Iran’s military command structure was also disrupted following the killing of several senior figures.

From Washington’s perspective, these developments bought time by setting back Iran’s military capabilities and limiting its ability to rebuild quickly, even if sanctions were lifted.

However, key US objectives remain unresolved. Iran’s stockpile of highly enriched uranium has not been secured, and parts of the missile program retain operational capacity.

At the same time, Washington may have underestimated the leverage Tehran could exert through the Strait of Hormuz. Iran’s move to close the strait triggered a sharp global energy shock, prompting intense pressure on the Trump administration. These dynamics likely contributed to Washington’s decision to shift unresolved issues to negotiations.

In that sense, the United States neither fully won nor clearly lost. It altered the strategic equation but did not achieve all of its objectives on its own terms.

The view from Tehran

The internal condition of the Islamic Republic remains difficult to assess because of extensive internet restrictions. However, Tehran’s acceptance of the ceasefire suggests that the damage inflicted across military and infrastructure sectors was substantial.

The war also produced a dramatic transformation in Iran’s command structure following the killing of several senior figures, including Supreme Leader Ali Khamenei.

The collapse of much of Iran’s air-defense network exposed the political center of power to continued vulnerability, making the possibility of further strikes a persistent concern.

At the same time, Iran’s leadership faced a different strategic risk: internal instability. Disruptions to electricity and fuel infrastructure, combined with the fragile legitimacy of the new leadership, raised concerns about potential unrest in a society already marked by repeated protest movements.

Hardline figures publicly criticized the ceasefire on Wednesday night, accusing the government of retreating under pressure. Yet the leadership appears to have concluded that a temporary pause was necessary to stabilize the domestic situation.

Tehran also believes it has gained leverage through the closure of the Strait of Hormuz. Reports have emerged that Iran seeks transit fees of roughly $2 million per ship. If such a system were implemented across normal shipping volumes—a major assumption—it could theoretically generate tens of billions of dollars annually.

A fragile truce

Shortly after the announcement, parliamentary speaker Mohammad Bagher Ghalibaf—who now leads Iran’s negotiating team—said that three provisions of the ceasefire framework had already been violated: Israeli attacks on Lebanon, Iran’s enrichment rights, and the incursion of a hostile drone into Iranian airspace.

Complicating matters further is the structure of the mediation effort itself. Pakistan, as a non-Arab Muslim state with working relations with both Washington and Tehran, appears a logical intermediary.

But Islamabad’s influence appears limited. Netanyahu’s rejection of Prime Minister Shehbaz Sharif’s remark that the ceasefire included Lebanon was a telling moment.

The absence of GCC powers and Lebanon also represents a structural weakness of the negotiations, as these actors remain deeply embedded in the conflict.

However, the decisive issue in the coming talks is likely to be the nuclear question. The central contradiction between Washington’s demand for zero enrichment and Tehran’s insistence on maintaining enrichment rights appears difficult to bridge. The fate of Iran’s existing uranium stockpile remains equally uncertain.

The Lebanese front presents another potential flashpoint. For Tehran, any perceived abandonment of Hezbollah would signal the collapse of the Axis of Resistance. Recent rhetoric from Iranian officials about defending Lebanese Shiite communities indicates that this front retains the capacity to derail the ceasefire.

The ceasefire therefore represents neither the end of the conflict nor the beginning of a durable peace. It is more accurately a pause within an ongoing confrontation.

The war did not generate the decisive pressure necessary to impose a lasting settlement. Both sides now hope to translate battlefield outcomes into diplomatic leverage. But based on what is publicly known, the negotiations appear unlikely to deliver the decisive achievements either side seeks.