After deciding against renewing all-out war against Iran, President Donald Trump signaled that he will continue applying economic pressure on the regime.
In an interview with Axios on Sunday, he said “we are low keying it” and only “semi-negotiating” with Iran, suggesting its collapsing economy will give the U.S. leverage.
“We are just watching Iran with its huge inflation and the fact they have no money,” Trump added.
He claimed Tehran can’t pay its troops and described Iran’s economy as being in “very bad shape,” arguing that the U.S. naval blockade has worsened the economic crisis.
By contrast, the America public is under less strain as oil prices have fallen on Trump’s pivot away from resuming major combat operations to give diplomacy a chance.
While Iran and Oman have been in talks over how to manage traffic through the narrow waterway, an agreement won’t automatically reopen the strait. Instead, Iran insists the U.S. must first satisfy several aggressive demands—including some that dampened hopes for the strait to return to normal anytime soon.
On Saturday, Iran’s Supreme National Security Council called on the U.S. to lift its naval blockade, end sanctions, pull out its military from the region, pay war reparations, unfreeze Iranian assets, end attacks on Iran’s proxies, and stop threatening the country.
Despite the bravado expressed by top officials, anxiety about the economy persists after high inflation and a currency crash sparked nationwide protests that were put down by a brutal crackdown in January.
Regime moderates have grown more worried that the U.S. naval blockade that was recently reimposed is bringing Iran’s economy close to collapse, sources told the Wall Street Journal. Iran’s deputy foreign minister also admitted the economy desperately needs sanctions relief that a deal with the U.S. could provide.
That tracks with earlier reports about Iran’s president and central bank chief telling Supreme Leader Ayatollah Mojtaba Khamenei the initial blockade was crippling the economy.
As a result, Trump sounded hopeful about a deal with Iran, even as both sides blame each other for being dishonest or untrustworthy.
“It will work out. It always works out. It’s like a chess game,” he told Axios.
His apparent patience to let Iran’s economy implode comes as his military options have narrowed. Despite 40 days of bombardment and another two weeks of more attacks last month, the U.S. was unable to fully reopen the Strait of Hormuz.
At the same time, stockpiles of U.S. munitions are running low, including interceptors needed to fend off Iranian drones and missiles, while the Pentagon’s top officer is reportedly looking for an off-ramp.
The absence of war may actually serve Trump’s purposes. A U.S. official told Axios that fighting allowed the Iranian regime to avoid addressing the country’s economic crisis and its inability to fix it.
But with oil inventories dwindling to critically low levels, a looming supply crunch that spikes energy prices again could also test Trump’s patience.
U.S. Navy
A U.S. official told Axios, however, that about 8 million barrels are quietly exiting the Persian Gulf each night through a southern lane in the Strait of Hormuz with help from the U.S. military, adding that the effort will continue as long as there is no deal.
A representative for U.S. Central Command didn’t immediately respond to a request for comment.
Before the ceasefire agreement fell apart, the U.S. military guided tankers through the alternate route that hugs the Omani coast and provided some protection. Enough ships made it out of Gulf to ease pressure on global oil markets.
But that prompted Iran to attack vessels trying to bypass its own corridor, reigniting hostilities and leading to the current standoff.
While maritime traffic data has shown minimal movement in the strait lately, that may overlook ships going “dark” that are sneaking out with their transponders turned off.
Any added leeway the U.S. can obtain in oil markets would allow the naval blockade to deepen rifts among Iranian officials.
On one side is a group of pragmatists like President Masoud Pezeshkian who are worried about the economy and want a U.S. deal that unlocks some concessions.
On the others side are hardliners led by the Islamic Revolutionary Guard Corps who reject engaging in talks with the U.S. The tensions often play out publicly, even in state-run media.
“When I read some of the opposition to negotiations, I honestly wonder what world these people are living in,” Deputy Foreign Minister Kazem Gharibabadi, who is a top negotiator, told IRIB.
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