On 28 February 2026 the United States and Israel killed Iran's Supreme Leader and began the largest air campaign since the invasion of Iraq. Nearly six months on, the strikes hit almost everything they aimed at — and Iran holds the one thing that matters. A guide to the causes, the motivations, the costs, and where this goes next.
The 60-day window written into the June memorandum expired on 16 August without a signature, and the formal mechanism for ending the war closed with it. Both capitals spent the following week writing their own terms into law instead of each other's. Washington is announcing sanctions whose stated purpose is to collapse the Iranian state; Tehran's parliament is legislating a charge on every ship that transits the strait. Nobody is negotiating. Brent closed last Friday at $94.39, its highest since July, and the rial went through 2 million to the dollar for the first time.
| Washington | Tehran | |
|---|---|---|
| The instrument | Sanctions Bessent calls “the greatest coordinated economic isolation in the history of the world”, layered on top of the naval blockade as what he describes as a one-two punch. | A parliamentary provision charging transiting ships for Iranian services, plus a Strait Authority empowered to fine, detain and confiscate. Neither is finished law yet. |
| What it prices | Access to the dollar, for anyone anywhere who deals with Iran. | Access to the water, for anyone who wants to move oil out of the Gulf. |
| Who actually pays | Third countries. Bessent declined to say whether China would be penalised, which is the only version of the question that matters. | Shipowners and their insurers — and, through freight rates, every importer downstream of the Gulf. |
| The stated objective | Collapse of the Iranian government. This is the first time the campaign's economic arm has been given a regime-change goal out loud. | Permanent revenue and a permanent legal foothold in a waterway Iran does not own. |
| What it forecloses | Bessent said major military attacks are unlikely to resume soon, which makes the stalemate policy rather than circumstance. | A negotiated reopening. Once the toll is domestic law, repealing it becomes a concession Tehran has to be paid for. |
| Forecast, 4 August | Status at day 178 |
|---|---|
| 1 · Stalemate holds through the midterms | Confirmed The 60-day mechanism expired unused on 16 August, and Bessent says major strikes are unlikely to resume while the sanctions run. Both sides have now chosen instruments that take months to bite. Confidence raised to very high. |
| 2 · Any durable deal concedes Iran a formal role in the strait | Confirmed, by an unforecast route The forecast assumed the role would be conceded at a table. Instead Iran's parliament wrote it into domestic law on 23 August and stood up an authority to enforce it. The prediction was that a durable deal would have to concede this; Tehran has removed the deal and kept the concession. Confidence raised to very high. |
| 3 · The nuclear programme is the defining strategic loss | Confirmed Eleven days of sanctions design, toll legislation and convoy management, and not one negotiating track touched enrichment or inspections. The file has now been absent from every round since the MOU lapsed. |
| 4 · Brent holds a $75–95 band | Holding, but at the ceiling $94.39 on 21 August is the top of the band and the highest print since July. The band has survived six months, but it has never been tested by a sanctions programme aimed at third-country buyers. Confidence cut to medium pending what today's announcement does to it. |
| 5 · The regime survives; the economy is the threat | The second half is now US policy A record-low currency through 2 million, and a US Treasury Secretary saying out loud that the goal is to collapse the government. The forecast treated economic failure as the regime's main risk; Washington has now adopted that risk as its plan. Still no bazaar in the streets, and Pezeshkian's own peace overture was slapped down within a day. |
| 6 · Gulf states hedge further toward Beijing | Cutting against, but the test is now real The Gulf is still buying Washington's hardware and still blaming the IRGC for tanker strikes. But “you're either with us or against us” is aimed squarely at the countries that trade with both, and Bessent would not say whether China is exempt. The hedge did not happen this month; the reason to make it just got stronger. |
Update as of August 24, 2026, day 178. Transit counts, oil prices and casualty figures move daily and disagree across sources; see the caveats in section 5.
A week ago a 60-day route arrangement was in final drafting and Washington expected the strait to reopen. It did not. Tehran spent the week separating the two things everyone had assumed were one deal — the lane through the water, and the strait's legal status — and attached to the second a price that is not a shipping term at all. Traffic fell to a three-month low, Brent went back to $90, and each government is now demanding reparations from the other.
| Condition | What it would take | Why it is not a shipping term |
|---|---|---|
| No further threats against Iran or its leadership | A standing US commitment not to strike — some outlets report it specifically as threats against the Supreme Leader. | Unverifiable, and no administration binds its successor — which is the point. |
| End the war permanently, including with regional allies | Covers Hezbollah, the Houthis and the Iraqi militias. | Converts a lane on a map into a regional settlement, most of which Washington does not control and Israel is not party to. |
| Lift the blockade, withdraw forces | Ending the naval blockade of Iranian ports and pulling US forces back from Iran's periphery. | The blockade is the one instrument Washington believes is working — 55 vessels redirected, three disabled, two boarded as of 11 August. |
| Full compensation for war damage | Reparations against roughly $270 billion of destruction. | Trump's reply on 11 August was a counter-claim for “50 years” of Iranian damages, back to the 17 sailors killed on the USS Cole in 2000. |
| Sanctions lifted, assets released | Unconditional release of frozen funds and an end to the sanctions architecture. | The entire pre-war negotiating file, now priced into a shipping route. |
Reporting counts these as five demands or six, depending on whether lifting sanctions and releasing frozen assets are treated as one item; the substance is the same either way.
| Forecast, 4 August | Status at day 167 |
|---|---|
| 1 · Stalemate holds through the midterms | Strengthened The talks that were meant to test this never convened, the near-deal produced a longer list of conditions instead of a signature, and each side is now demanding reparations from the other. Naqdi's attrition line and Caine's off-ramp are the two ends of a stalemate, not of a settlement. |
| 2 · Any durable deal concedes Iran a formal role in the strait | Firing, but the deal receded The route, its coordinates and a proposed joint coordination centre to manage traffic all concede the role. Tehran then decoupled that arrangement from the strait's status, so the concession got larger while the prospect of a signed deal got smaller. |
| 3 · The nuclear programme is the defining strategic loss | Confirmed Iran's foreign ministry stated on 4 August that there are no IAEA inspectors in the country, and the deputy foreign minister says access will be settled only inside a final agreement. Every negotiation this week was maritime. Confidence raised to very high. |
| 4 · Brent holds a $75–95 band | Holding, upper half $89.53 on 12 August after a 2% overnight move, roughly 24% above pre-war. The EIA's 2026 average projection is $87. The band survives; the risk premium has moved back into it. |
| 5 · The regime survives; the economy is the threat | Both halves worsening A currency near its record low, 87.9% inflation, fuel queues in an oil state — and 916 executions since January, which is what suppression rather than stability looks like. Still no bazaar in the streets. |
| 6 · Gulf states hedge further toward Beijing | Cutting against The UAE blamed the IRGC by name for the ADNOC strike, and Gulf officials read China's refusal to restrain Iran — plus its veto of the shipping-protection resolution — as complicity. The hedge may still come, but this week the Gulf moved toward Washington's hardware, not Beijing's. Confidence cut to low-medium. |
Update as of August 13, 2026, day 167. Transit counts, oil prices and casualty figures move daily and disagree across sources; see the caveats in section 5.
Two days after this study was published, the diplomatic track moved further than it has since the June memorandum — and moved in the direction the forecasts said it would. Below this section the study is the one published on 4 August, with day-160 figures folded into the oil chart and the chokepoint table and the new week added as a fifth phase. The six forecasts in section 7 are left exactly as they were written and are scored here instead. This update is kept as written; the 13 August update above says what became of it.
| Term | What it says | Who it favours |
|---|---|---|
| Duration | 60 days, provisional. One Iranian negotiator put the range at one to three months. | Neither — it defers the question |
| Transit fees | None during the interim window. Iran wants authority to levy “service fees” for maritime security and environmental protection once it expires. | Iran, on a 60-day delay |
| The route | Two lanes. Inbound traffic runs north, through Iranian waters past Larak Island. Outbound runs south, through Omani waters. | Iran — a lane it polices |
| Iran's concession | It dropped the demand to control traffic in both directions. | US, marginally |
| Signatories | Iran and Oman. The US takes part through calls between envoy Steve Witkoff, Iranian foreign minister Abbas Araghchi and Omani foreign minister Badr al-Busaidi — and signs nothing. | Iran — no admission that US talks happened |
| Left open | Fees after day 60, naval mine clearance, and whether US sanctions even permit shipping companies to coordinate with Iranian authorities. | — |
It is also not signed. Araghchi agreed in principle over the weekend, but the text needs approval from the Supreme National Security Council and from the Supreme Leader installed eight days after the United States killed the last one. Qatar — which says draft language is circulating and the talks are in “very progressive stages” — is pressing for any permanent arrangement to be settled by regional consensus rather than by the two coastal states alone. Mohsen Rezaei, military adviser to the Supreme Leader, put Iran's position on state television without the diplomatic wrapping: no vessel transits except on Iran's stipulated route.
| Forecast, 4 August | Status at day 160 |
|---|---|
| 1 · Stalemate holds through the midterms | On track The signal to watch was “another ambiguous document rather than a verifiable one”. A 60-day route arrangement that postpones the fee question is precisely that, and it did not even come from the round that was supposed to produce it. |
| 2 · Any durable deal concedes Iran a formal role in the strait | Signal fired The signal named transit fees, service charges, a joint authority, and the Oman track. All four are in the draft — which is neither signed nor durable, so the forecast is not yet won. Confidence raised from med-high to high. |
| 3 · The nuclear programme is the defining strategic loss | Tell observed “If a settlement covers shipping but not inspections, that is the tell.” The draft covers shipping. Nuclear terms are a separate track that is not moving, and the IAEA still has no access to anything. |
| 4 · Brent holds a $75–95 band | Holding $83.82 on 3 August, two days of decline on deal optimism, then back to about $80 on the Red Sea attack. The price is still moving on diplomacy rather than on barrels. |
| 5 · The regime survives; the economy is the threat | Unchanged Pezeshkian called this the hardest period since 1979 — an economic statement, not a military one. No sign yet of the bazaar returning to the streets. |
| 6 · Gulf states hedge further toward Beijing | Slow Qatar insisting that the strait's long-term governance be settled regionally, rather than by Washington's broker, is a small instance of the same drift. |
Update as of August 6, 2026, day 160. What is described here is a draft, not a signed agreement, and an agreement at this stage of drafting has already collapsed once — see phase 3.
President Trump authorised Operation Epic Fury at 20:38 UTC on 27 February. Strikes began the next morning at 06:35 UTC: Tomahawks, HIMARS, B-2s, and roughly 200 Israeli aircraft in the largest combat sortie in Israel's history. The targets were ballistic-missile facilities, command centres, and air defences.
The defining act came in the first hour. A leadership-decapitation strike on Supreme Leader Ali Khamenei's residential compound killed him and a large number of senior officials. No outside power had killed a sitting Iranian Supreme Leader before; there was no script for what followed.
Iran answered within 48 hours with about 170 ballistic missiles and drones. They hit Tel Aviv, killed nine in Beit Shemesh, and struck four US bases — Al Udeid, Ali Al Salem, Al Dhafra, and the Bahrain headquarters — plus targets in Dubai. By 3 March nine countries were involved. Hezbollah entered from Lebanon on 2 March; Israel answered with more than 70 strikes on southern Lebanon and Beirut's Dahieh.
Then, on 4 March, Iran declared the Strait of Hormuz closed. That decision, not the decapitation, is why the war is still running.
The shape of this conflict is not a front line. It is a cycle: overwhelming air campaign, Iranian chokepoint retaliation, negotiation, collapse, repeat. It has now run through twice, and the third pass stalled before it reached a signature.
Goal: remove the leadership and the means of retaliation in one blow.
Decapitation assumed the system depended on the man. It did not. Succession took eight days, and the successor had less incentive to compromise than the man who was killed.
Iran's answer to losing the air war: stop being in it.
Iran could not win an exchange of airpower. It could impose a cost on the global economy that no amount of airpower removes, because reopening a strait requires holding both shores — which means a ground war nobody in Washington wanted.
Convert a stalemate into terms.
The MOU required Iran to use “its best efforts for the safe passage of commercial vessels, with no charge for 60 days only.” Washington read that as an open waterway. Tehran read “for 60 days only” as written permission to charge afterwards — and therefore as recognition that the strait was Iran's to charge for.
Both sides return to the position they held in April, poorer.
The deal arrives through the door nobody was watching.
The June memorandum was a US–Iran document about ending a war, and it died on one ambiguous sentence about charges. This is an Iran–Oman document about a lane on a map, with the charges question removed from the text entirely and parked sixty days out. It is a narrower deal, which is why it has a better chance of being signed — and why signing it settles less than it appears to.
Iran separates the lane from the waterway, and names what the waterway costs.
Until this week both sides were negotiating over a waterway. Iran has now repriced it as a war settlement, and the mechanism it is bargaining with — a route it polices, plus a proposed joint coordination centre — would survive any deal that gets signed. The fight is no longer about whether Iran gets a role in the strait. It is about what Iran gets paid for using it.
CENTCOM has redirected 55 commercial vessels, disabled three and boarded two since the blockade was reimposed on 14 July. The blockade and the counter-blockade are now both in force at once.
The stated reasons and the operative reasons are not the same for anyone here. Both are worth tracking, because the gap explains why the war has no natural stopping point.
| Actor | Stated aim | Operative interest | Constraint |
|---|---|---|---|
| United States | Stop the nuclear programme; destroy missile and naval capability; end proxy support; reopen the strait. Rubio framed it as pre-emption against an “imminent threat” to US bases. | Contested. Senator Warner stated there was “no evidence that Iran was going to launch a pre-emptive strike”. Critics call it a diversionary war — it began amid the Epstein files release and falling approval. Securing Iranian oil and gas was named as an objective by officials. | No congressional authorisation. Approval below 40% for the war's entire duration — 33% job approval by mid-August, with about two-thirds of Americans saying the war is not worth the risks. Midterms in November. |
| Israel | Existential: an Iranian bomb and the missiles to deliver it, plus decades of sponsorship of hostile militias. | Netanyahu had sought this strike for years and lacked a willing US president until now. The war coincided with his own legal jeopardy; polling moved from a tie to 62% support. | Cannot reopen Hormuz alone. Simultaneous fronts in Lebanon and Gaza. |
| Iran | Self-defence against unprovoked aggression and the assassination of its head of state. | Regime survival first. Then: prove the state functions without Khamenei, and convert the one asset airpower cannot destroy — geography — into sanctions relief and unfrozen assets. | An economy in free fall. Missile stocks halved. Cannot escalate without inviting the ground war it is trying to avoid. |
| Gulf states | De-escalation and reopened shipping. | They are being hit by both sides' war: Iranian missiles on Ras Tanura and Qatari LNG, drones over Kuwait, and an oil windfall they cannot ship. Saudi Arabia lobbied Washington directly to call off the August campaign. | Host US bases that make them targets. No independent security guarantee. |
| Russia | Condemns the strikes as unacceptable aggression; convened emergency UNSC sessions. | Straightforwardly enriched. Higher oil prices, relief on export sanctions, and a distracted Washington. Offered China an energy lifeline as Gulf supply choked. | Little ability — or desire — to change the outcome. |
| China | Concern for Gulf sovereignty; blames the war's “root causes”. | Buys Iranian crude and depends on Hormuz, yet gains by standing aside: it vetoed a US-backed reopening resolution with Russia while keeping Gulf ties intact, since those relationships are economic rather than security-based. | Most exposed of anyone to a prolonged closure. |
Split the question in two, because the answers are opposite.
Iran's conventional military has effectively collapsed as a fighting force.
| Measure | Before | Now | Read |
|---|---|---|---|
| Missile launches per day | 480 | <10 | The high-intensity phase is over — Iran cannot sustain volume fire |
| Ballistic missile inventory | — | 500–1,500 | Roughly a third to a half destroyed |
| Operational mobile launchers | — | <120 | About half lost; the binding constraint on any salvo |
| Guidance & radar production | Parchin, Shiraz | Destroyed | The “brain” of the programme — surviving missiles are harder to aim |
| Navy | Surface + subsurface | Speedboats | Corvette and submarine sunk; IRGCN small craft survive |
US intelligence still assesses that Iran maintains significant launch capability, and the “missile city” architecture is decentralised enough to survive. But the character of the threat has changed from conventional deterrent to guerrilla harassment — a speedboat and a drone against a tanker, not a salvo against Tel Aviv.
Measure each side against what it said it wanted, and the scoreboard inverts.
| War aim | Status | Assessment |
|---|---|---|
| Destroy missile & naval capability | Achieved | Halved arsenal, navy sunk, production hit |
| Remove the leadership | Achieved | And replaced within 8 days by a harder-line successor |
| Regime change | Failed | The IRGC consolidated rather than fractured |
| Reopen the Strait of Hormuz | Failed | 5% of pre-war volume; Iran now prices reopening as an end to the war — see the 13 August update |
| End the nuclear programme | Unknown | Unverifiable — inspectors have no access at all. See section 6 |
Every phase of this conflict is legible in one line. Brent moves on diplomacy, not on bombing — which tells you which lever actually matters.
| Date | Brent | Event |
|---|---|---|
| 27 Feb 2026 | ~$72 | Day before the war |
| 2 Mar 2026 | $118 | Strait declared closed — peak, +64% |
| 21 Apr 2026 | ~$95 | Ceasefire extended indefinitely |
| early Jul 2026 | ~$72 | Post-MOU low (derived: Brent is +16.4% over the month to 3 Aug) |
| 3 Aug 2026 | $83.82 | −4.68% on the day, on news of talks |
| 5 Aug 2026 | ~$80 | Two days of decline on Hormuz-deal optimism, then a bounce on the Red Sea tanker attack |
| 12 Aug 2026 | $89.53 | Deal stalls; Iran sets five conditions for reopening — about +24% on pre-war |
| Metric | Before | Now |
|---|---|---|
| Oil through Hormuz | 10.3 Mb/d | 0.515 Mb/d (5%) |
| Daily transits | ~60 ships | 13 — five-day average to 11 August, near a three-month low |
| War-risk insurance (VLCC) | 0.125% of hull | ~1% (~$2M/transit); peaked at 2.5–5% |
| Marine insurance claims | — | $1.5–2B from about 70 casualties since late February |
| Asia–Europe container spot rates | — | +150% |
| Reroute via Cape of Good Hope | — | +3,800 nm, 10–14 days, ~$40–50M/week fleet-wide |
Vessel counts disagree across sources and across what they count: the tally used here puts the pre-war baseline near 60 transits a day, while the reporting around the August talks uses about 130 before the war against 8 on 5 August and 13 a day in the week to 11 August. The oil-volume line is the firmer number, and it says 5%.
The strait normally carries roughly a fifth of the world's oil and a quarter of its LNG. The Dallas Fed projected the closure would cut annualised global GDP growth by 2.9 percentage points in Q2 2026 and push WTI to $98 in Q2 and $115 in Q3. The heaviest losses fall on energy-importing developing countries that have no strategic reserve and no alternative route.
The rial passed 1.47 million to the dollar in January, before the war; by 12 August it was near 1.88 million on the open market, off a record 1.96 million set on 18 July. Government figures put eggs up 345%, rice 287%, milk 139%. Iran has lost around 230 million cubic metres per day of gas production and is warning citizens of blackouts. By August the blockade had produced fuel shortages inside an oil state: Iran cannot refine enough gasoline and diesel for its own demand and can no longer import the difference. Senior officials have told President Pezeshkian that rebuilding will take more than a decade. The blockade threatens roughly 70% of export revenue.
This matters strategically: the largest and longest wave of unrest since 1979 began in December 2025 — before the war — when bazaar merchants in Tehran protested the currency collapse. The war interrupted that movement by supplying an external enemy. The economics that caused it have since become far worse.
| Source | Figure | Scope |
|---|---|---|
| Cross-source tracker | 8,976–18,310 killed | All sides, to 30 July |
| Conservative count | 7,144–9,676+ killed, ~46,965 injured | All fronts, to 20 July |
| HRANA | 1,701 civilians, incl. 254 children | Iran, to 7 April |
| Hengaw | 7,650 killed, 1,030 civilian (13.5%) | Iran, first 40 days |
| Lebanese Ministry of Public Health | 4,328 killed, 12,229 wounded | Lebanon, since 2 March |
| OCHA and UNHCR | 3.2 million displaced, 60% women and children | Internal displacement in Iran |
The spread between the high and low totals is roughly a factor of two. That is normal for an active war with no independent access, and it is a reason to distrust confident precision — including anyone citing a single number without a source.
The war's stated purpose was to stop Iran building a bomb. It is the one objective that cannot currently be evaluated — by anyone.
The last verified inventory, from before the June 2025 strikes, was 440.9 kg of uranium enriched to 60%, plus 184.1 kg at 20% and several tonnes at lower enrichment. Most of the 60% material is believed to be buried in tunnels at Esfahan. Fordow — the deepest site — was undamaged in the 2025 round. The IAEA's director has said Iran could resume enrichment within months.
Two facts sit awkwardly against the war's rationale. The Defense Intelligence Agency assessed that Iran would not field an ICBM until 2035. And on 2 April, with the campaign under way, Trump said publicly that he did not care about Iran's highly enriched uranium stockpile — the stockpile that had been the stated reason for the strikes.
Analysts converge on four scenarios: strategic stalemate (most likely), diplomatic breakthrough, full escalation, or state collapse. Below are six specific forecasts, each with the signal that would confirm or kill it.
| Prediction | Confidence | Watch for | What it means |
|---|---|---|---|
| Stalemate holds through the November midterms. Neither side can achieve its aim at acceptable cost. The cycle — strike, chokepoint retaliation, talks, collapse — has already run twice and has no built-in stopping point. | High | A third round of talks that produces another ambiguous document rather than a verifiable one. The 3 August round is the test case. | Plan for elevated energy costs and closed Gulf shipping as the base case, not the risk case. |
| Any durable deal concedes Iran a formal role in the strait. The MOU already conceded it implicitly with “no charge for 60 days only”. Iran's negotiating position rests entirely on that concession being made permanent. | Med-high | Language about “transit fees”, “service charges”, or a joint authority. Iran's parallel talks with Oman over an alternative route are the same idea in another form. | The war's likely settlement ratifies the thing it was fought to prevent. |
| The nuclear programme becomes the war's defining strategic loss. Not because Iran dashes for a bomb, but because nobody can any longer say whether it has. Deterrence without verification is a permanent crisis generator. | High | Whether any deal restores IAEA access. If a settlement covers shipping but not inspections, that is the tell. | Expect this to be the subject of the next crisis, on a multi-year horizon. |
| Oil settles structurally higher but well below the March panic. Markets have priced a long closure; the residual premium is now about diplomacy, not supply. Brent fell 4.7% in a day on a rumour of talks. | Med-high | Whether Brent holds a $75–95 band. A break above $100 means escalation the market didn't expect; below $75 means it believes a deal. | The price is now the most honest real-time poll on whether this ends. |
| The regime survives the year; the economy is the threat, not airpower. Decapitation consolidated the IRGC rather than fracturing it. But 68.9% inflation and pre-existing bazaar protests are a different kind of pressure, and one the war has been suppressing rather than solving. | Medium | Protests resuming with economic rather than political slogans, especially if blackouts arrive with winter. Watch the bazaar, not the campuses. | Regime change, if it comes, arrives through the currency — on a timeline no air campaign controls. |
| Gulf states hedge further toward Beijing. They took Iranian missiles because they host US bases, then watched Washington plan an escalation they had to lobby against. China vetoed the reopening resolution and kept its Gulf relationships intact anyway. | Medium | Gulf–China security language, not just trade deals. Saudi's successful August lobbying is the precedent to watch. | The war's durable geopolitical effect may be in the Gulf's alignment, not Iran's. |
Forecasts as of August 4, 2026; confidence labels are judgment, not measurement. They are frozen as written and scored twice since: in the 6 August update at day 160, and again in the 13 August update at day 167, where two confidence levels moved — one up, one down.
If you read nothing else, these five things: