Iran’s strategy in its confrontation with the United States has evolved beyond conventional military deterrence into a broader effort to reshape the regional balance of power by imposing economic and strategic costs on its adversaries. According to analysis by The Soufan Center, Tehran has sought to ensure that any future U.S. administration would weigh the global economic consequences of renewed military action against the Islamic Republic. While that approach has enabled Iran to accumulate significant leverage in negotiations with Washington, it has also generated new risks, expanding the number of regional actors willing to confront Tehran directly and exposing limitations in the protective value of its longstanding network of allies.
At the centre of the current diplomatic effort is the Strait of Hormuz, one of the world’s most strategically important waterways. The conflict initiated by U.S. President Donald Trump and Israeli Prime Minister Benjamin Netanyahu on February 28 transformed the narrow maritime corridor into both a military flashpoint and a diplomatic bargaining chip. Iran’s leadership appears to believe that its actions during the conflict have created sufficient leverage to negotiate an agreement with Washington on terms more favourable than would have been possible before the war.
Earlier mediation proposals by the Sultanate of Oman were rejected by Iranian hardliners, particularly elements within the Islamic Revolutionary Guard Corps (IRGC), which instead escalated tensions by targeting shipping in the Strait of Hormuz and attacking U.S. forces stationed in Jordan. Those actions effectively derailed previous diplomatic efforts. However, renewed mediation by Muscat in late July appears to have shifted the trajectory of negotiations.
The emerging framework, which President Trump has suggested could be announced within days, envisages a temporary arrangement under which Iran would oversee inbound shipping near its coastline while Oman would manage outbound traffic along its own coast, operating in coordination with Tehran. During the proposed 60-day interim period, both countries would negotiate a longer-term agreement governing joint management of maritime traffic through the Strait. U.S. officials have indicated that neither country would impose mandatory fees or tolls during the interim period, although Iran and Oman could share voluntary service fees paid by shipping companies. The reported arrangement also includes a return to a ceasefire and the lifting of the U.S. naval blockade of Iranian ports.
Although Iranian officials have acknowledged that discussions with Oman remain active, they have not confirmed President Trump’s assertion that an agreement is imminent. Nevertheless, the emerging framework reflects an important shift. If finalised, analysts cited by The Soufan Center assess that the agreement would effectively acknowledge Iran’s enhanced capacity to influence movement through the Strait of Hormuz, preserving strategic leverage that Tehran did not possess before the conflict. Yet uncertainty remains over whether Iran’s hardline factions will ultimately support an agreement favoured by civilian leaders seeking to avoid additional damage to the country’s infrastructure.
Iran’s broader military strategy has rested upon the belief that the Arab Gulf states represented the most vulnerable element within the U.S.-led coalition. Tehran calculated that sustained attacks against Gulf infrastructure and regional targets would increase political pressure on Washington to seek de-escalation rather than prolonged conflict. That assessment appears to have proved accurate to the extent that repeated attacks on Gulf energy infrastructure and military facilities hosting U.S. forces inflicted substantial economic damage. Iran’s missile and drone strikes disrupted revenues across the Gulf while undermining economic diversification programmes dependent upon stable investment flows and reliable access to international markets and advanced technology.
The closure of the Strait of Hormuz compounded those pressures, prompting Gulf leaders to persuade President Trump to postpone a planned escalation in favour of allowing Oman-mediated negotiations to continue. Iran also threatened further retaliation, including possible attacks on critical desalination infrastructure, should the United States proceed with a major new strike package.
Yet Tehran’s calculations have not unfolded entirely as anticipated. Iranian leaders appear to have assumed that Gulf governments would avoid direct military retaliation and instead seek accommodation by distancing themselves from Washington. Instead, several states have begun abandoning long-standing self-imposed restraints on direct military action against Iran.
Even while negotiations continued, Iran and its allied militias maintained attacks across the region. Kuwait remained under sustained pressure as Iranian-backed militias in Iraq and Iranian forces sought to compel the withdrawal of U.S. Army units employing Precision Strike Missile (PrSM) systems against targets in southern Iran. On Tuesday, the IRGC launched a three-drone attack against a U.S. military base in Kuwait.
The geographical scope of the conflict has also continued to widen. An apparent drone strike against Damietta, a Mediterranean port in Egypt, resulted in two ships, including a U.S. gas tanker, catching fire. The incident marked the first attack on Egyptian territory since the conflict began and brought hostilities closer to European waters. Earlier in the war, several Iranian missiles also crossed into Turkish territory.
Saudi Arabia has occupied a particularly significant position within Tehran’s calculations. Iran encouraged the Houthi movement in Yemen to intensify pressure on the Kingdom by blockading shipping through the Bab el-Mandeb Strait. According to Houthi military spokesman Yahya Saree, the movement “successfully targeted the Saudi oil tanker ‘Wafa’ in the northern Red Sea, off the coast of the [major Saudi Red Sea oil loading port of] Yanbu, with a number of ballistic missiles.” The vessel became the eighth ship targeted since the blockade commenced on July 22. Simultaneously, Iran-backed militias in Iraq continued launching drone attacks against oil installations in Saudi Arabia’s Eastern Province.
Rather than forcing Gulf governments to retreat, however, these attacks appear to have encouraged closer military coordination against Tehran. Bahrain and Kuwait joined the United Arab Emirates in conducting what were described as quiet bombing raids against military targets inside Iran, representing the first known direct attacks by those Gulf states on Iranian territory. The UAE is also reported to have been conducting strikes against Iranian targets for several months despite repeated Iranian threats of retaliation.
Saudi Arabia subsequently demonstrated its own willingness to respond militarily by participating alongside the United States in strikes against bases used by pro-Iranian Iraqi militias near Basra. Several IRGC advisers and more than 25 Iraqi militia members were reported killed during the operation. Saudi defence ministry spokesman Major General Turki al-Malki characterised the operation as a measured response to attacks on Saudi infrastructure rather than an expansion of the wider conflict, stating: “The Kingdom confirms that it is not seeking escalation but that it will respond to any aggression.”
The consequences extend beyond direct military exchanges. The strike against Iraqi militias is expected to increase pressure on Baghdad to accelerate efforts to disarm Iran-aligned armed groups, while other components of Tehran’s regional alliance network also face mounting challenges. Hamas has agreed to disarm, and Hezbollah continues to face sustained pressure from Israeli military operations in Lebanon.
Attention is also increasingly focused on Yemen, where reports suggest Saudi Arabia may be considering stronger action against the Houthis. Although observers indicate that Riyadh is presently engaged in contingency planning and force repositioning rather than launching an immediate offensive, Saudi officials have announced the creation of a 14-nation defence coalition intended to safeguard international shipping and energy routes in the Red Sea. Any successful campaign against the Houthis would significantly weaken one of the principal non-state partners upon which Iran has long relied to complicate U.S. and Israeli military planning.
As The Soufan Center’s assessment suggests, Tehran has succeeded in demonstrating its capacity to generate disruption across the Middle East and the global economy, strengthening its negotiating position over the future of the Strait of Hormuz. At the same time, the conflict has revealed important constraints on Iran’s strategy. The inability to deter repeated U.S. military operations, the growing willingness of Gulf states to retaliate directly, and increasing pressure on Tehran’s regional allies collectively indicate that Iran’s expanding leverage has come at the cost of a more complex and increasingly hostile regional security environment.
