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One side just overplayed their hand in Iran war

By Sohail Khan 29 September 2026, 11:08 am

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Business News›News›International›World News›Trump or Iran? One side just may have overplayed their hand

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Trump or Iran? One side just may have overplayed their hand
Synopsis

The US and Iran remain locked in a high-stakes standoff after Donald Trump rejected Tehran’s latest offer, with Washington betting that tighter oil sanctions and control over Hormuz will force concessions. But Iran’s leadership may be willing to absorb severe economic pain to protect the regime, leaving both sides at risk of miscalculating how long the other can hold out.

A chance was missed last week to put the standoff between the US and Iran on a path toward settlement rather than escalation: Tehran made an offer and Donald Trump refused it. The attempt failed because neither was ready to compromise, and if that’s the end of the matter one side will have overplayed its hand. The question is which — and that does not have a simple answer.

The US president is playing hardball with growing confidence. His aides have been briefing media outlets that the US holds all the cards, and Trump himself told Axios that the phased deal Tehran put on the table was one he might have accepted a year ago, but not now. He also said Iran was mistaken if it thought the approach of US midterm elections gave it leverage, because he doesn’t even consider them.

Some of this is clearly untrue. Trump does consider the midterms, or he wouldn’t keep saying he may go back to bombing Iran once they’re over. He just doesn’t care about them as much as the Iranians — and perhaps some Republican congressional candidates — want him to.

It’s also inconceivable that the president would have accepted the current Iranian proposal a year ago, before the start of the war. The offer consists of frontloaded concessions to be fulfilled by the US, in exchange for Iran committing to two things: to stop trying to close the Strait of Hormuz to international traffic within seven days and to then begin nuclear talks — or at least talks about what those should cover.

Of course, until the day before the war began some seven months ago, Hormuz was open and the US and Iran were already in nuclear talks. So why on earth would Trump agree to hand over $12 billion and other gifts just to get what he already had?

But these are just niggles. Much more important is that the Islamic Republic and its military successfully turned the war into a contest for control over the strait. For some time, they appeared to have the upper hand. What gives Trump his confidence is that they no longer do.

That’s because the US Navy has proved highly effective at closing Hormuz to Iranian oil, while eventually succeeding in the much more difficult task of opening the waterway to non-Iranian traffic. Iran’s Islamic Revolutionary Guard Corps are trying their best to blow ships up, but the Navy’s defensive umbrella has caused them to fail.

As my colleague Javier Blas has written, this took time to become apparent because the escorted ships have traveled “dark,” with their transponders switched off and commercial satellite companies cooperating with the US to make it hard for industry analysts to track the tankers. That made it harder for Iran to stop the flow, and also for independent oil analysts to verify US claims about how much oil the Navy was getting out. By now, though, it’s clear that Washington’s figures were substantially correct. Flows also surged after drone damage to Saudi Arabia’s East-West backup pipeline forced Riyadh to divert less crude from Hormuz to the Red Sea. As many as 22 million barrels may have passed through the strait in 48 hours over the weekend, compared with about 20 million a day before the war.

Iran has been unable to do the same for its own oil. The US has managed to impose a total blockade on Iran’s maritime crude exports, while at the same time tightening the noose on its wider economic sanctions-busting. That’s in part because the Gulf states — which had previously been somewhat leaky — are now motivated to shut evasion channels down. That puts an already weak Iranian economy in an increasingly dire situation.

But that’s just one side of the story. From day one of the war, this US administration has failed to grasp the degree to which the Islamic Republic sees it as an existential fight, one it’s been preparing for since the 1979 revolution. The regime has lived with economic sanctions for most of that time. It built resilience into succession plans not just for Supreme Leader Ali Khamenei but for a host of top military and political positions that it knew to be potential targets.

It is the tragedy of Iran that its leaders do not care about the welfare of its people, on whom the lion’s share of the hardship from sanctions will continue to fall. They care only about the survival of the Islamic Republic, which is to say their own. For sure, there are debates among the elite over how best to ensure their security, but the goal is shared. Trump has also proved hardliners correct about US untrustworthiness, tipping the debate away from Iran’s limited willingness to compromise that made the (since abandoned) 2015 nuclear deal possible.

Seen from the perspective of the generals now ascendant in Tehran, the risks to their survival from peace — when they must again face the fury of their own people — are as great as those from continued war. That increases their incentive to hold out for more economic relief than the US wants to give, as well as for the geopolitical leverage and deterrence that control of Hormuz provides, and if need be, to escalate.

So, if the Iranians are overestimating Trump’s political sensitivity ahead of the midterms, Washington is suffering a similar failure of analysis in assessing Iran’s susceptibility to economic pressure. In the meantime, Tehran is threatening to widen the war by asymmetric means, not just in the Gulf but beyond. Iran has denied responsibility for the five men arrested this weekend for attempting to sabotage a US air Force base in Fairford, England, and there is as yet no known evidence of a link. Nevertheless, it serves as an example of kind of action the Islamic Republic could take.

Something will break, but it’s hard to say when, on which side, or after what further unintended consequences have spun off from the conflict. With Qatar still reportedly conducting shuttle diplomacy, a deal could yet emerge from the rejected Iranian offer, which was itself just an abbreviated version of the short-lived Memorandum of Understanding the two sides signed in June. The one certainty is that neither side actually holds all the cards or can be sure of what happens next should diplomacy fail.

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US Iran conflictTrump Iran negotiationsStrait of HormuzIran economic sanctionsIran military strategyUS Navy operationsIran nuclear talkshormuz

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