Back in June, at the G7 summit in Évian-les-Bains, Donald Trump explained why he stopped bombing Iran: continued hostilities wouldn't reopen the Strait of Hormuz, commercial ships would stay away, and emergency oil reserves were dwindling. "We run out of reserves in about four weeks," he warned, painting a picture of shortages and a market collapse on the scale of 1929. Trump told the press he studied presidents, and "the one president I did not want to be was the late, great Herbert Hoover."
Fast-forward to late July. The United States has bombed Iran for nearly two weeks, hitting coastal-surveillance sites, weapons-storage facilities, bridges, tunnels, rail lines, airports, and electrical infrastructure. Iran has retaliated with missiles and drones aimed at American bases in Bahrain, Iraq, Jordan, Kuwait, and Qatar, as well as strikes on oil installations, a desalination plant, and repeated attacks on commercial shipping in and around the strait. Iran also claims to have struck Amazon's cloud-computing infrastructure in Bahrain, though this has not been independently verified.
Trump resumed the war despite having already explained why military force couldn't achieve its most pressing objective. He has not resolved this tension. It may be irresoluble. In the meantime, he is betting that Tehran will buckle before economic pressure forces him to do the same.
To understand where we are, consider how the cease-fire collapsed. Each party believed it had won the war and that the other should accede to its interpretation of the agreement on the strait. Article 5 of the memorandum of understanding stated that Iran "will make arrangements using its best efforts for the safe passage of commercial vessels with no charge, for 60 days only, from the Persian Gulf to the Sea of Oman and vice versa." The Trump administration took this to mean Iran was obligated to open the strait without tolls for 60 days. But Tehran read it as permission to manage and control access. Consequently, Iran sought to funnel ships through corridors it approved, and attacked or threatened vessels that used other routes.
In doing so, Tehran made a serious error in judgment. If it had laid low, it could have reaped the benefits of economic concessions for 60 days and then gradually introduced a toll. Instead, Trump felt compelled to respond, and the agreement broke down. Amos Hochstein, a senior adviser for energy and investment under President Biden, told me that Iran had thought it could boil the proverbial American frog, but it turned the temperature up too high too fast, and the frog got angry.
Trump is clearly frustrated. Further escalation is likely. He has mused about striking Pickaxe Mountain and is reportedly considering limited ground operations - for example, seizing Kharg Island, a hub for Iran's oil exports. The Wall Street Journal reported that the United States is sending more forces, medics, and weaponry to the Middle East to give Trump additional military options. But such options were ruled out as implausible or reckless during the war, and their viability has not improved with time.
If Trump continues with limited strikes, he will face the very problems he laid out in France last month. Hochstein posted on X that the current escalation in the Strait of Hormuz could be more economically dangerous than the previous one, because Russia, the U.S., and China can no longer buffer world markets as they did: Russia has reduced its diesel exports, U.S. crude and strategic reserves are unusually low, and China is cutting its oil consumption less deeply than before. In his view, markets are already signaling the inflationary risk, leaving Trump with a narrowing window to make a deal before another disruption produces a sharper fuel-price and financial shock, possibly as soon as mid- to late September.
Iran seems to want to keep the conflict at a simmer. It is striking back but has avoided direct attacks that would bring Saudi Arabia, the United Arab Emirates, or Israel fully into the war, even as it applies pressure indirectly, most dramatically through the Houthis' campaign against Saudi shipping in the Red Sea. Reuters reported that Iran had previously asked the Houthis to prepare to close the Red Sea route if the United States struck Iranian power infrastructure.
Meanwhile, Trump seems to be actively working to keep the Gulf states on board. Two weeks ago, his administration significantly loosened restrictions on the export of advanced semiconductor chips to the UAE, something Abu Dhabi has been wanting for years. Then, on Wednesday, he announced that he had approved a civil nuclear-enrichment deal with Saudi Arabia. The Biden administration negotiated a similar arrangement with Riyadh as part of a broader deal to normalize relations between Saudi Arabia and Israel. That deal, which stalled after October 7, would have provided for U.S. enrichment inside Saudi Arabia rather than giving it the ability to autonomously enrich its own uranium. The technical details of the Trump deal are unknown.
No sooner was the Saudi agreement announced than Israeli former officials and experts criticized it, on the grounds that it would fuel regional proliferation and did not require Saudi Arabia to normalize relations with Israel. On Thursday morning, Trump posted that the deal would not be approved without normalization - which was puzzling, given that the accord had been signed the day before. Hours later, Karoline Leavitt, the White House press secretary, said that if the Saudis don't join the Abraham Accords, "the deal is off," which likely means the administration will not submit it to Congress for review, as required by law.
Washington is trying to prevent Iran from becoming a nuclear power, offer new economic and technological commitments to Gulf states, protect two maritime choke points, and fight an open-ended air war, all while the energy reserves and political patience needed to sustain those projects are running down.
Trump may inflict more pain on Iran, but this is unlikely to compel Tehran to abandon its attempt to control the Strait of Hormuz. Perhaps Iran will agree to put its ambitions on hold for 60 days in the hope that the previous agreement can be revived. But if the two sides remain gridlocked, Trump will have to decide whether to pay the economic price for continuing a low-intensity war indefinitely; escalate, with all of the risks that entails; or walk away.