Iran Holds Hormuz Hostage: Why a Battered Regime Still Has the Cards

Despite more than five months of sustained U.S. and Israeli military strikes that have dismantled much of Iran's conventional military and killed numerous top leaders, Tehran is behaving as though it holds the decisive hand in negotiations — and so far, it's not wrong. On Saturday, Mohammad Bagher Zolghadr, secretary of Iran's Supreme National Security Council, laid out Iran's price for reopening the Strait of Hormuz: a permanent end to the war, full lifting of the naval blockade, complete U.S. military withdrawal, termination of all sanctions, release of frozen Iranian assets, payment of war reparations, and an end to what Tehran characterizes as threats and insults. The list reads less like an opening bid and more like a victory declaration.

Treasury Secretary Scott Bessent briefly fueled optimism Tuesday morning by going on CNBC to suggest a deal could be announced that same day, sending stock markets sharply higher. No deal materialized. The gap between Washington's expectations and Tehran's demands is vast, and Iran appears in no hurry to close it. Former Defense Secretary Mark Esper, speaking Sunday on ABC, said Iran's posture reflects a regime that genuinely believes it is winning — a striking assessment given the military punishment it has absorbed.

The strategic logic is stark: the Strait of Hormuz remains irreplaceable as a chokepoint for Middle East energy and trade flows, and Iran needs only a handful of missiles and drones to keep the waterway dangerous and disrupted. The U.S. has been visibly reluctant to commit ground troops to clear the strait, and questions persist about the depth of American munitions stockpiles after months of intensive operations. That combination gives a severely weakened Iran a form of leverage that survives its military losses. Trump, who famously told Ukrainian President Volodymyr Zelensky in February 2025 that he didn't 'have the cards' against Russia, now faces a negotiating adversary that has identified its one remaining card and is playing it aggressively.

Trump faces three unpleasant options: restart large-scale military strikes, endure a prolonged standoff, or negotiate on terms that would amount to a significant concession to a regime the U.S. has spent months pummeling. None is clean. Meanwhile, the broader political picture in Washington is complicated by Netanyahu's rare public break with Trump over a Gaza disarmament plan, hardening voter pessimism about Republican economic management ahead of the November midterms, and Hunter Biden's BBC interview confirming that his father's cancer has spread to the bones and is, in his words, deeply debilitating.