Advice to Europe: “America hasn’t won, but Iran may be losing.”

*This article was originally published in French

In Europe, and especially in France, the verdict seems to be in. The United States, we are told, has pursued a strategy toward Iran that is as brutal as it is ineffective. It is bogged down in the Strait of Hormuz, unable to force an Iranian surrender, while Europeans bear much of the bill in higher energy costs, disrupted trade, and a renewed risk of escalation.

There are facts behind this argument. The strait remains severely disrupted. Tehran still has missiles and a considerable capacity to inflict damage. The U.S. strikes on Larak Island on August 30 were more than a reminder that escalation remained possible. They were followed on September 1 by another round of strikes against the Islamic Revolutionary Guard Corps (IRGC) and Iranian retaliation against several U.S. bases in the region. Open hostilities have resumed. But to read this renewed fighting as proof that American strategy is failing is to confuse the absence of a quick victory with the absence of strategic results.

A strategy cannot be judged solely by whether the adversary capitulates. It must also be judged by what it does to that adversary’s resources, choices, and sources of leverage. On that last measure, Iran’s position is changing. It is too early to claim an American victory. But a central element of Tehran’s calculation is beginning to backfire: its ability to impose higher costs on its adversaries than it bears itself.

For four decades, the Strait of Hormuz was one of the Islamic Republic’s best insurance policies. The regime could advance its nuclear program, finance its proxies, and alternate diplomacy with threats, knowing that open confrontation would immediately impose a global economic cost on its adversaries. Before the war, nearly a fifth of the oil consumed worldwide passed through the strait. The threat was simple: You can sanction us, isolate us, even strike us. But push too far, and oil prices will rise, maritime insurance costs will soar, supply chains will be disrupted, and your own voters will eventually demand that you back down.

After the U.S. and Israeli strikes on February 28, Tehran put that doctrine into practice. The Revolutionary Guards announced the closure of the strait and warned ships not to cross it. Traffic collapsed almost immediately. The weapon the regime had threatened to use for decades was finally being deployed on a large scale.

Washington responded with a naval blockade, imposed on April 13, suspended on June 18, and reinstated on July 14. The suspension accompanied the June memorandum of understanding and a 60-day waiver once again permitting Iranian oil sales. Exports briefly recovered, reaching roughly 1.545 million barrels per day during the week of June 29. After renewed Iranian attacks on commercial shipping, U.S. Central Command (CENTCOM) reimposed the blockade. The regime had secured tangible relief: permission to resume oil sales. It then forfeited that relief by renewing its attacks. That episode is a stronger answer to claims that pressure cannot work than any shipping statistic.

Since then, talk of a “reopening” has required a distinction. Oil flows have partially recovered. In late August, Goldman Sachs estimated Gulf exports at 15 million to 16 million barrels per day, roughly two-thirds of prewar levels. On August 27, CENTCOM said it had cleared the main international shipping lanes of mines; a U.S. official said about 40 ships crossed the strait on September 1 under Navy guidance. Publicly visible AIS vessel-tracking data suggested a much lower level of traffic, to the point that Reuters still described Hormuz as “effectively closed”. The figures plainly do not capture the same transits. What matters more than a dispute over counts is how ships are getting through: U.S. escorts, transponders switched off, and ship-to-ship transfers. Oil has begun moving again, in part, on terms set by Washington and the Gulf states, not with Tehran’s consent.

Liquefied natural gas (LNG) presents the opposite picture. Qatari exports remain virtually at a standstill, and QatarEnergy has extended force majeure on some European deliveries into early November. Three Qatari and Emirati LNG cargoes were transferred between ships outside Hormuz in August, but this rare practice shows only that a workaround is technically possible, not that it exists at scale. The oil trade has partly resumed; LNG remains blocked.

This distinction strengthens the strategic case. The question is not whether Iran can still disrupt Hormuz. It plainly can. The question is whether that disruption still gives it the same coercive power over its adversaries. Iran has failed to make its adversaries bear the costs of paralysis rather than bearing them itself. What oil traffic has resumed has done so without Tehran’s permission, while Iran’s own cargoes remain blocked.

Gulf producers are also adapting their routes, but it is important to be precise about what constitutes a genuine bypass. Saudi ship-to-ship transfers off Sohar or Fujairah still require Aramco’s own tankers to cross Hormuz, often with their AIS transponders switched off. These transfers shift risk from buyer to seller; they do not eliminate it. The true bypass routes are Saudi Arabia’s East-West pipeline to Yanbu, the sea route from Yanbu to Ain Sukhna followed by the SUMED pipeline to Sidi Kerir, and the UAE’s ADCOP pipeline to Fujairah. These routes lack the capacity to replace Hormuz, but they do remove a meaningful share of exports from exposure to Iran’s threats.

Tehran is trying to slow this adaptation. The Revolutionary Guards have blacklisted ships accused of violating their transit rules and threatened to seize them or confiscate their cargoes. Iran can still drive up costs and complicate alternative arrangements. But every month in which Hormuz remains dangerous gives producers, shipowners, and buyers another reason to invest in reducing their dependence on it.

Brett McGurk, who served in senior positions under four U.S. presidents, including Donald Trump, has described this reversal as a phase the Islamic Republic has never faced before: a military quarantine targeting its principal source of revenue. His argument is not that Hormuz has returned to normal. It is that if Gulf oil starts moving again while Iranian crude remains trapped, Tehran can no longer hold the entire strait hostage. Its leverage dissipates as others regain access while it does not.

Iranian exports provide the decisive test. Vortexa’s Claire Jungman notes that even at the height of “maximum pressure” in 2019-2020, some Iranian crude passed through Hormuz every month. Outbound flows had never remained near zero for as long as they have since mid-July; since then, no new cargo of Iranian crude has reached China through the strait. In August, crude and condensate loadings fell to 220,000-255,000 barrels per day, from about 740,000 in July and 2 million in March. Twenty-seven sanctioned Iran-linked tankers were waiting in ballast off Sri Lanka, unable to return to load. Tehran can still sell floating stocks already positioned in Asia, but it can no longer replenish them at the same pace. That break distinguishes the current blockade from a mere tightening of sanctions.

None of this means Iran has been economically strangled. Beijing rejects U.S. sanctions, and the networks used to conceal the origin of cargoes have not disappeared. Clandestine flows are, by definition, difficult to measure precisely. But for a regime whose main source of foreign currency remains hydrocarbons, a sustained contraction in its principal export market changes the equation. It does not guarantee the regime’s collapse. It does reduce the financial and strategic room for maneuver that has allowed Tehran to bet on outlasting its adversaries.

Nor did Iran enter this confrontation from a position of economic strength. President Masoud Pezeshkian has acknowledged a 35 percent fall in foreign trade. In August, the central bank’s urban price index recorded point-to-point, or year-on-year, inflation of 84.4 percent, compared with a rolling 12-month average rate of around 65 percent; the Statistical Center of Iran put nationwide year-on-year inflation at 89 percent. The rial had passed two million to the dollar. The central bank says it can defend the currency, but it has also announced that it is prepared to deploy up to $2 billion to stabilize it.

This is what much of the European debate misses. We look at energy prices, trade disruptions, and the risk of escalation, and conclude that Tehran’s gamble has paid off. But those costs are not a side effect of Iran’s strategy. They are its instrument.

Tehran is not disrupting Hormuz for the pleasure of seeing fewer ships pass through it. It is seeking concessions. Mohsen Rezaei has cited an end to the regional war, the lifting of the blockade, compensation, and sanctions relief, among other conditions; the Supreme National Security Council has published a six-point list. Treating higher oil prices as sufficient reason to ease the pressure would therefore demonstrate to the regime that its instrument of coercion works.

This does not make Europe’s costs unimportant. They are substantial. The real question is what political conclusion to draw from them. If the Islamic Republic learns that it can win sanctions relief by disrupting world trade for long enough, Hormuz will emerge from this crisis as an even stronger instrument of blackmail. If, instead, its closure durably reduces Iranian revenue, pushes buyers to diversify their supplies, and accelerates the construction of alternative routes, the weapon will remain dangerous but yield diminishing strategic returns.

That is why Iran can remain very far from surrender while its position deteriorates. For decades, its strategy rested on the conviction that time was on its side: democracies would tire of expensive oil, nervous markets, and an unpopular war before the regime tired of sanctions, isolation, and the impoverishment of its population. Washington is now trying to reverse that asymmetry.

Operation Economic Outcast, launched on August 24 by Treasury Secretary Scott Bessent, is intended to turn today’s constraints into sustained pressure. The idea is to target not only Iranian shell companies but also the foreign banks, brokers, trading networks, and other intermediaries that enable them to sell oil and move money.

The first case shows both the substance and the limits of that ambition. On August 28, FinCEN issued a notice of proposed rulemaking under Section 311 of the USA PATRIOT Act, finding the five UAE branches of Banque Misr, an Egyptian state-owned bank, to be of primary money laundering concern. The proposed rule would impose the fifth special measure: a prohibition on U.S. financial institutions opening or maintaining correspondent accounts for the benefit of those branches. The proposal is not yet in force, and it is distinct from a sanctions designation. Public comments are open through October 1. FinCEN identifies about $1.8 billion in transactions processed by the branches for 103 companies potentially linked to Iran’s shadow banking system between January 2024 and June 2026. Banque Misr’s Cairo headquarters and other branches are not covered.

The scope is narrow: Egypt and the UAE are both U.S. partners, while China, which Treasury itself says takes nearly 90 percent of Iran’s oil exports, remains untouched by this new instrument. Bessent has supplied his own benchmark: every Bank Melli branch must be shut down. The real test would be action directly targeting a Chinese institution, on the model of the measures taken against Bank of Kunlun in 2012, or a Section 311 finding against banks financing China’s independent refiners. As long as Washington targets peripheral intermediaries without reaching the main Chinese channels, Economic Outcast will remain dramatic but incomplete.

Europe, too, needs to examine how it uses its own tools. Since nuclear-related sanctions were restored in September 2025, the EU has again prohibited imports and transport of Iranian oil, gas, and petroleum products, imposed substantial financial restrictions, and reinstated asset freezes on Iran’s central bank and several major banks. Foreign ministers reached political agreement on listing the IRGC as a terrorist organization on January 29; the Council formalized the designation on February 19. The EU has since extended sanctions to those responsible for Iran’s attacks on freedom of navigation.

Europe’s main problem is therefore no longer a lack of legal tools, but their enforcement. Directive 2024/1226 required member states to criminalize sanctions violations by May 20, 2025. The questions are now concrete: How many Iran-related cases have been opened on that basis? How many have led to prosecutions, and what sentences have been imposed? The contrast in transparency is striking. The EU publishes a consolidated figure of roughly €210 billion in immobilized Russian central bank assets, but no comparable figure for Iran. It should publish the assets frozen, transactions blocked, investigations opened, and convictions secured.

One test comes this month. France, which holds the Security Council presidency in September, has announced a vote on September 17 to renew the panel of experts monitoring sanctions on Iran. Moscow and Beijing argued in March that the Council could re-establish neither the 1737 Committee nor its panel of experts. Europe therefore needs a plan for what follows a veto. After Russia vetoed renewal of the North Korea panel in 2024, allies created the Multilateral Sanctions Monitoring Team. If the September 17 vote fails, Europe should lead an equivalent initiative for Iran, bringing together states willing to share intelligence, document sanctions evasion, and publish joint reports. That would give Europe’s role more substance than a vote destined to be blocked.

This does not require Europe to adopt U.S. secondary sanctions automatically. It requires Europe to enforce the decisions it has already made: trace financial flows, identify shell companies, prosecute violations, and make the results visible enough for banks, insurers, brokers, and shipowners to understand that evasion carries a real risk. Having restored sanctions and placed the IRGC on its terrorist list, Europe cannot remain a power that merely legislates. It must become one that enforces its decisions.

There is, finally, a fundamental limit to any strategy that stops there. Impoverishing Iran is not a victory. An authoritarian regime can ruin its country while retaining enough resources to protect those who keep it in power. Maximum pressure on the regime must therefore be matched by maximum support for the Iranian people.

That means preparing, before the next wave of protests, the tools needed to circumvent internet shutdowns, support independent Persian-language media, sanction those responsible for repression, and encourage defections from the security forces. Iran’s political future belongs to Iranians. But fear of instability must not turn the preservation of the Islamic Republic into an implicit Western objective. The purpose of pressure is not to bring the regime back to the table yet again by offering it time, money, and a respite. It is to reduce its ability to repress Iranians and threaten its neighbors, while giving Iranian society the means to act when protests resume.

The question, then, is not whether Tehran can still cause harm. It can, as Hormuz demonstrates every day. The question is whether that harm still produces the intended strategic result: forcing its adversaries to retreat before the regime itself pays the price of confrontation. Nothing yet warrants declaring an American victory. But the evidence increasingly suggests that Iran’s calculation is breaking down. Europe’s mistake would be to confuse the cost of confrontation with the failure of the strategy, and, in its haste to end the crisis, hand Tehran back the leverage it is beginning to lose.

Simone Rodan-Benzaquen is senior envoy for Europe at the Foundation for Defense of Democracies (FDD).