U.S.-Iran war sinks into energy trench warfare six months on: Bousso

Six months into the U.S.-Iran war, the conflict is hardening into a stalemate that could last well into 2027, with energy markets held hostage, inflation elevated and neither side willing – or able – to back down. The war, which has killed thousands and inflicted extensive damage across the Middle East, has undergone a profound transformation. It began on February 28 as a joint U.S.-Israeli effort to cripple Iran militarily, aiming to eliminate Tehran’s nuclear program, weaken its proxy network and potentially topple the government. But it has evolved into a narrower struggle focused on one question: who controls the Strait of Hormuz, the narrow waterway used to carry roughly a fifth of global oil and liquefied natural gas supplies. Duelling Iranian and U.S. blockades have sharply curtailed traffic through the strait over the past six months, disrupting energy markets and imposing mounting costs on global economies. While crude prices have not spiked as anticipated – largely thanks to ample global inventories, reduced Chinese imports and increased oil production outside the Gulf – Brent crude LCOc1 remains around $90 per barrel, roughly 25% above its pre-war level. Market buffers that cushioned the initial energy shock are now largely exhausted – a worrying sign. The conflict has exposed the real bottleneck in the global energy system. It’s not crude supply but refining capacity. Around a fifth of Middle Eastern refining capacity is offline because of war damage or export disruptions. Chinese refinery activity is running well below year-ago levels, and Russian refinery throughput remains constrained by Ukrainian drone attacks. Combined, these disruptions reduced global refinery runs in August by roughly 4 million bpd, or 5%, from a year earlier, according to Energy Aspects. The result is a growing shortage of fuels. That distinction matters politically for the Trump administration because voters buy gasoline, not crude oil. U.S. gasoline prices have risen roughly 30% over the past year, while diesel prices have surged more than 50%. Even if additional crude begins flowing through Hormuz, rebuilding refining capacity will take far longer. The administration's options for bringing down domestic fuel prices are narrowing by the day. Iran appears unlikely to blink first. Its economy has suffered enormously. U.S. efforts to choke off oil exports – Tehran's main source of revenue – have cut them by about 85% from pre-war levels, to 250,000 barrels per day (bpd) in August, fuelling inflation and deepening hardship. Yet the government has proven far more resilient than anticipated. Rather than collapsing after Supreme Leader Ayatollah Ali Khamenei was killed in an Israeli air strike on the war's first day, the Iranian government has adapted and hardened its position. Iran may be unable to dominate the region militarily, but it has demonstrated an ability to inflict economic pain on its adversaries through effective control of Hormuz, using periodic attacks and threats against tankers. Meanwhile, U.S. President Donald Trump has indicated little interest in escalating the conflict in ways that could truly endanger U.S. troops or the global economy. With November's U.S. midterm elections approaching, the conflict has become increasingly unpopular with U.S. voters as energy-driven inflation has amplified cost-of-living concerns. This leaves Washington with one key objective: restoring energy flows through Hormuz and lowering fuel prices at home. The question is how? Recent White House moves underscore these limitations. On Monday, U.S. Treasury Secretary Scott Bessent expanded sanctions against Tehran and threatened secondary measures against countries continuing to do business with it, describing the campaign as an "economic D-Day." Yet sanctions are unlikely to deliver breakthroughs, and threats of secondary sanctions hold little weight when Bessent has made clear that Washington seeks to avoid actions that could seriously upset the global economy. That reduces the likelihood that the U.S. will impose severe penalties on China, Tehran's largest oil customer – one of the few economic measures that could move the needle with Iran. Washington is also attempting to jawbone markets by arguing that oil flows through Hormuz are recovering rapidly despite Iranian threats. Over the past week, senior White House officials have argued that Gulf exports are approaching pre-war levels as more tankers depart under U.S. naval protection, with their transponders turned off. Energy Secretary Chris Wright said on Friday that the seven-day average for oil leaving Hormuz had climbed above 8 million bpd. However, shipping analytics firms monitoring Hormuz through satellite imagery and vessel-tracking data see little evidence of a recovery. Oil exports through the strait have averaged just 2.2 million bpd so far in August, according to Kpler. Total regional crude exports, including shipments from Saudi and Emirati ports that bypass Hormuz, averaged about 9 million bpd this month, down from 11 million bpd in July and roughly 17 million bpd in 2025. While the administration may be seeking a deal behind the scenes, the contrast between Washington's public claims and the data suggests desperation rather than strength. The longer the conflict drags on, the harder it becomes for Trump to argue it is succeeding. The Islamic government remains in power, Hormuz remains constrained, fuel prices remain elevated and economic costs continue to mount. The U.S. possesses overwhelming economic and military power but little appetite for a wider war. Iran is economically weakened, yet has demonstrated a willingness to absorb extraordinary pain to pursue strategic goals. The conflict is therefore a contest of endurance rather than manoeuvre. Despite what Trump and Bessent argued this week, U.S. economic pressure resembles the grinding trench warfare that kept World War One going far more than the decisive Allied offensives that ended World War Two.

U.S.-Iran war sinks into energy trench warfare six months on: Bousso

War settles into a stalemate

Refining bottlenecks and fuel prices

Iran and the U.S. search for leverage

Sanctions, market claims and an enduring stalemate

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