The Iran war reaches a temporary impasse
As we went to press on 1 July, the situation in the war of the US against Iran was that a Memorandum of Understanding to negotiate the end of the war had been signed on 17 June 2026, which was immediately followed by an attempt by the US to breach its terms in order to defend a ship that had defied the agreement for Iran to continue to control passage through the Strait of Hormuz while negotiations were proceeding. A further breach was Israel’s continuing its war in Lebanon though the Memorandum of Understanding had agreed a halt. These breaches were followed on 27 and 28 June by the resumption of bombing campaigns on both sides that turned out to be particularly damaging to US military bases throughout the Middle East.
President Trump tried to frighten Iran into submission by threatening that Iran would “no longer exist” if it did not honour the agreement to end the war, to which Iran responded by launching drone and missile attacks targeting US military sites in Bahrain and Kuwait, and threatening a “complete halt” in negotiations to end the war if the United States continued its attacks.
Shortly afterwards Trump announced unilaterally that talks would be resuming in Doha, and the bombing stopped. A US official claimed both parties agreed to halt attacks and allow vessels to move freely through the Strait of Hormuz. Iran, however, although welcoming the cessation of hostilities, had not agreed to these talks, and much less to give up its control of shipping through the Strait of Hormuz. This control is what we might call Iran’s best ‘Trump’ card, that it cannot afford to give up at any price, with which to force its recalcitrant enemy to keep to its MOU commitments.
Hence on 2 July Iran issued a clear statement in the following unequivocal terms: “Any failure to comply, deviation from the designated route, or disregard for the navigation protocols of the Islamic Republic of Iran in the Strait of Hormuz will be met with an immediate and forceful response from the armed forces, endangering the security of the violating vessels”. Despite that, vessels still kept trying to force their way through, and on 3 July Iran duly attacked three commercial vessels transiting the strait including Marshall Islands-flagged M/T Al Rekayyat, Saudi Arabia-flagged M/T Wedyan, and Liberian-flagged M/T Cyprus Prosperity.
The following weekend, the funeral of Ayatollah Ali Khamenei took place, drawing crowds of tens of millions, making it abundantly clear to US imperialism that virtually the entire Iranian population was in support of their government, and that it was opposing not just a ‘regime’ but millions of militant and determined people.
Unable to take a hint, however, US Central Command on 7 July carried out a round of some 80 strikes against Iran in response to Iran’s attacks on the three commercial vessels. These strikes, according to Centcom, “struck Iranian air defence systems, command and control networks, coastal radar sites, anti-ship missile capabilities, and more than 60 Islamic Revolutionary Guard Corps small boats in and near the strait”. In addition, the US revoked a licence, negotiated under the MOU, that had allowed Iran to conduct oil sales openly in US dollars for the first time in years. Clearly the gloves were off.
If they thought that Iran would be forced to back down, they were very shortly disappointed. Overnight on 8 July Iran fired missiles and drones across the Persian Gulf targeting US military installations in Bahrain and Kuwait, met a few hours later by an additional round of strikes by US Central Command. Trump announced that the truce of 17 June was “over”.
On 14 July, in addition to maintaining its bombing campaign, the US began enforcing a naval blockade against Iranian ports and coastal areas, with more than twenty US warships and hundreds of military aircraft deployed across the Middle East.
Throughout the remainder of July, Iran continued to attack shipping that tried to pass through the Strait of Hormuz without Iranian consent, and the US and Iran traded bombing strikes that were very damaging to the interests of both. All Iranian strikes, however, continued to be made purely in response to American ones. They stopped when finally the US decided it had had enough.
So finally, “Donald Trump has paused plans to escalate the war on Iran after being warned that the US is running low on missiles.
“For the first time in nearly two weeks, the US president called off strikes on the Islamic Republic at the weekend [25-26 July] and has set aside plans to return to major combat operations” (Melanie Swan, ‘Trump pauses Iran strikes over missile shortages’, The Telegraph, 26 July 2026).
Running out of WMD
It was widely recognised that the decision to call off strikes was affected by a shortage of missiles. The shortage of weaponry was supposed to be kept secret but somehow it became public, much to the fury of the Trump administration:
“Bombing Iran burned through thousands of multimillion-dollar missiles that contain precision parts from a global web of suppliers and can take years to produce. Defending against Iran’s retaliatory barrages has worn down U.S. stocks of air-defense missiles to an extent that has privately alarmed top officials in the Trump administration and has led to the United States’ delaying deliveries to European and Asian customers” (Anton Troianovski, Jonathan Swan, Eric Schmitt and Julian E. Barnes, ‘The US is burning through weapons in Iran. Russia and China are taking note, New York Times, 8 August 2026)
The Sunday Times adds:
“Those who see America as the ultimate superpower customarily overrate the power of its military. But recently we’ve learnt that its ability to continue, let alone escalate, operations in Iran has been stymied by a shortage of munitions.
“To anyone who has watched the Pentagon closely, this crisis in munitions supply — what the military calls magazine depth — is no surprise. And while President Trump has claimed, ‘We have far more than we need,’ leaks just before the start of operations in February suggested he had been warned by the chairman of the joint chiefs of staff, General Dan Caine, about the limited number of certain advanced weapons.
“Now the American stockpile of Patriot anti-missile interceptors is estimated at less than 800, compared with 2,300 before the Iran war. There are about 250 of the even more capable Thaad (terminal high altitude area defence) missile, compared with 600 three years ago. As for offensive weapons, half the Tomahawk cruise missiles have been used up in the past 18 months, and almost all the 350 land-based precision strike missiles that were in the inventory in February” (Mark Urban, ‘How did mighty America end up with a shortage of missiles?’, Sunday Times, 16 August 2026).
It transpires that US imperialism was already short of missiles at the beginning of its assault on Iran because of the amount it had used up in supporting the Ukraine fascists in the fight against Russia, and that it then depleted its stocks to what was a frightening level to those who had been looking forward to US imperialism launching aggression against Russia directly and against China.
Furthermore, “The Trump administration has worked with military contractors to try to accelerate and expand production. But even accounting for those efforts, it could take more than two years for the United States to replenish the more than 1,500 Patriot air-defense interceptor missiles that have been used in the Iran war” (Anton Troianovski et al, op cit). In other words, it is going to take a long time to rebuild the stocks – and longer still – maybe indefinitely – if the US continues to burn through them at the rate it has been doing in Ukraine as well as Iran.
The cost!
On 21 July the US defence secretary Hesgeth begged Congress to allocate some extra £50 billion to finance military spending. It seems that the cost of the Iran war alone has to date risen to some £28 billion but that “Without these funds, we face critical shortfalls that threaten our ability to… pay our service members, rapidly replenish equipment and munitions, and sustain vital operations without disruption,” Mr Hegseth told the Senate appropriations committee.
The massive cost of the war is helping to increase the US’s public debt and therefore its borrowing costs, meaning that an increasing portion of the government’s budget every year has to be used to pay interest to the loan sharks rather than being spent for the benefit of the public – or for war, for that matter. If your loans enable you to earn more money than you have to pay out in debt servicing, a high debt is not a problem. However, this is not the case with most government debt, and certainly not with the US government debt.
“The US national debt reached a record $40tn on Wednesday, according to Treasury department data. The government has consistently run deficits of 6 per cent of GDP in recent years and is not expected to reduce them any time soon, owing to Trump’s tax cuts and pledge to raise defence spending by more than 50 per cent to $1.5tn a year” (Ramsay Hodgson, Claire Jones and Myles McCormick, ‘US long-term bonds slide as Treasury secretary Bessent’s intervention fails to soothe investors’, Financial Times, 20 August 2026).
The further problem with this record indebtedness, that amounts to about 100% of GDP, is not just that it has to be repaid with interest but that it diminishes the country’s creditworthiness so that it cannot borrow except at higher rates of interest than before. All this causes havoc in the bond markets, as the resale price of bonds (loans to the government) that had been issued earlier decreases because the new bonds offer better value, which in turn reduces the value of the securities of this type that are held by many financial institutions (banks) and may actually undermine their solvency and set off another financial crisis, followed by recession. Such are the joys of the capitalist system, the financial tides and currents of which are beyond human control. As it is the dollar has been falling in value against other currencies (which will make imports more expensive) in anticipation of the inflation that government overspending is expected to cause.
All this has an impact on the living standards of American people, which have already been declining sharply. They already resent the fact that petrol is costing them $1 more a gallon, but what they can expect in the future is higher prices all round and more slashing of public expenditure of the kind that benefits ordinary people. A considerable part of that will be due to the war against Iran that most Americans now oppose according to a Reuters/Ipsos survey of 28 July 2026 which found that only 33% of Americans approve of the Iran war.
The ongoing closure of the Strait of Hormuz is bound to send oil prices and fertiliser prices soaring, which will have a serious impact on the cost to ordinary consumers of energy and food. All this may result in Trump’s party, the Republican Party, losing the control of the Senate in the mid-term elections to be held this November. This could create the possibility of US imperialism withdrawing from its Iran quagmire without achieving any of the goals it set itself when launching the war, but on the contrary having to stomach Iranian charges on vessels passing through the Strait of Hormuz, claiming the whole thing was a mistake made by a senile President Trump. We shall have to see.
US change of tactics
Having apparently abandoned all hope of winning the war by continued bombing, the US tactic is now to tighten the economic screws on Iran hoping that these will finally force the Iranian people to turn against their government and overthrow it.
This requires it (a) to maintain its naval siege on Iran, and (b) to obtain cooperation in the imposition of strangulation sanctions from the rest of the world. With his usual bombast, “President Donald Trump said the US will launch what he called the ‘most crushing economic operation ever taken against any country’ against Iran, threatening severe financial penalties on any nation that helps Tehran evade sanctions…
“He said any country whose financial institutions, businesses, airports, or government entities offer Iran a ‘lifeline’ will face what he described as tremendous economic consequences of their own.
“The president named oil smuggling, currency swap lines, cash transfers, exchange houses, ship registries and front companies as channels he wants shut down immediately…
“’It all needs to stop NOW. You know who you are,’ Trump said of those who continue to trade with or maintain economic ties with Iran. “This will be an ECONOMIC D-DAY, and we need all of our Allies to stand with the United States of America to isolate, and defeat, the Iran threat’” (Anniek Bao and Chloe Taylor, ‘Trump threatens “Economic D-Day” for Iran and ‘tremendous’ consequences for its backers’, CNBC, 19 August 2026).
However, Iran has been under sanctions for years and has been able to develop the necessary resilience. Iran’s deputy foreign minister, Kazem Gharibabadi, said in a post on X on Thursday 20 August that “the military war didn’t yield results, so now they’ve named the next failure ‘economic war.’”
Quite clearly China and Russia are not going to be frightened off by sanctions, and in any event Iran has a high degree of economic self sufficiency,
A major problem with the tactic of economic strangulation is that attempting it against Iran while the latter is in control of the Strait of Hormuz is likely to turn into an own goal, particularly as far as energy markets are concerned. Prices are already approaching $100 a barrel, a very high price. It now appears that even this price has been artificially kept down by both the US and China resorting to reserves and buying less on the market in order to keep demand – and therefore prices – as low as possible. And of course reserves don’t last forever! In America’s case they are already running dangerously low as has been pointed out by Spencer Kimball of the US’s Consumer News and Business Channel (CNBC):
“The US Strategic Petroleum Reserve (SPR) has fallen below 300 million barrels for the first time since the early 1980s due to a 172 million barrel release in response to the Iran war. Experts warn this rapid drawdown risks damaging the underground salt caverns [in which the oil is stored], which were originally designed for only five full cycles, not the dozens executed over 40 years. While the Energy Department claims the reserve is being responsibly managed, independent analysts and former officials argue that levels below 300 million barrels threaten structural integrity and operational capability [of the reserve]” (15 August 2026).
The prospect of the oil price rocketing from its current already extremely high rate of $93 per barrel of Brent crude to $200 cannot be discounted, and the economic chaos that will cause is almost unimaginable. And to this, severe shortages of fertiliser will be added, leading to escalating prices for food.
Another problem for US imperialism is whether it has the naval resources to keep the blockade on Iran going indefinitely. Its navy is staffed by sailors who need to be fed and watered and, moreover, usually have homes to go to. Recent events surrounding the US aircraft carrier, the USS Abraham Lincoln, show that long-term conditions on board are intolerable, with shortage of supplies, particularly toiletries, and confined living space and interminable loud noise. After 9 months at sea (months longer than the navy’s recommended maximum), several attempted suicides have recently taken place. Formerly it was possible to mitigate the effect of living in these poor conditions with frequent periods of shore leave, during which stores could also be replenished. However, Iran’s destruction of US bases in places like Bahrain mean that these places are no longer safe for the US military, leading to the need to travel 2,200 miles to Diego Garcia in order to be able to rest in comparative safety. Of necessity this means that rest stops have to be much less frequent. The result has been a burgeoning of mental health problems among the personnel.
Conclusion
On 17 August the 60-day deadline for a settlement laid out in June’s memorandum of understanding between the United States and Iran expired with no agreement in place.
Iran has repeatedly stated categorically that it will not reopen the Strait of Hormuz until the United States removes its blockade of Iranian ports, pays compensation for its war damage, lifts sanctions, and releases Iran’s frozen assets. And that is where matters now rest.
Both sides remain intransigent and it would appear that for the moment any return to negotiation would be pointless. Oman, which is a US ally, had set itself up to mediate the issue of passage through the Strait of Hormuz, only to find it had infuriated Trump who responded: “If Oman gets in the way, we’ll bomb the shit out of them.” Matthew Gould, who has been the British ambassador at different times to both Iran and Israel was gobsmacked: “Given the sultanate is a long-term US security partner and has been trying to help the US find a way out of the conflict, the threat was extraordinary” (‘The ceasefire has expired. How could the US-Iran war escalate?’, Sunday Times, 23 August 2026). Perhaps not so extraordinary when one considers the hopeless corner into which President Trump has painted himself, and the whole of US imperialism, by starting the war against Iran, and the sheer desperation he must be feeling behind all his bluster.
Meanwhile fascistic little Israel is taking advantage of the situation, while Iran is effectively out of action, to focus its military activity on pursuing its genocide in Gaza, as in the West Bank and as in southern Lebanon. The Lebanese in particular are putting up an effective and stubborn fight but Lebanese people are paying a terrible price. It is entirely possible that the current impasse in the war against Iran will be broken by a resumption of military hostilities by Iran once its imperialist enemy has been further weakened by the workings of its own imperialist financial system. It is certainly time that justice were done for once and for all – and ultimately this requires Anglo-American imperialism to be ejected entirely from the Middle East.