Hormuz remains a powerful but diminishing source of leverage for Iran

A Dual Framework: Economic Emergency and Managing Risk in the Strait

Iran began the morning of October 4, 2026, with two developments that complement each other. Domestically, the government announced that it had shifted to a “new economic framework” tailored to “special conditions.” Regionally, the discussion surrounding the Strait of Hormuz is becoming more sober. The threats have not disappeared, nor has the attempt to use the strait as leverage. But alongside the language of power, a question is now emerging that was far less prominent a few weeks ago: what happens if that leverage is used for too long?

This shift does not represent a retreat from Hormuz. On the contrary. Tehran still seeks to control the level of risk, the conditions of passage, and the price the world pays for instability. But the debate is beginning to move away from a binary logic of “open or closed” toward more selective management of maritime traffic. The problem is that the longer the situation continues, the more other countries learn to adapt to it.

At the same time, the Trump administration continues to speak in the language of decisive action. The U.S. president said that he had already made a decision regarding Iran and presented it with an “easy” path and a “hard” path, without disclosing exactly what he had decided or what was required of Tehran. From Iran’s perspective, the ambiguity itself makes it possible to frame the remarks as another threat. For the regional system, it leaves everyone waiting for the next move.

Hormuz: The Lever Is Powerful as Long as It Can Be Reversed

Algeria has offered to mediate the crisis surrounding the Strait of Hormuz, but at this stage the offer amounts only to diplomatic willingness. No mandate or framework has been announced, and it is not known whether Tehran or Washington has accepted the proposal.

The more interesting development came from Iraq. According to reports, two million barrels of oil were transferred to a supertanker outside the strait, in a move intended to allow delivery and pricing outside the risk zone. Iraq also plans to purchase additional tankers that would enable it to expand the model.

On the surface, this is a logistical solution. In practice, it has strategic significance. The more Iraq, the Gulf states, and shipping companies become accustomed to ship-to-ship cargo transfers, overland pipelines, and delivery hubs outside Hormuz, the more the strait’s value as an Iranian lever could diminish.

The threat remains dangerous. The mere possibility that Iran could disrupt the passage of oil and goods continues to affect insurance, pricing, and supply chains. But if the world begins building alternative routes, part of the cost gradually shifts from Tehran itself to the strategic importance of Hormuz.

This warning is already appearing within Iranian discourse. Commentaries associated with the establishment are beginning to describe the strait as a space that is neither fully open nor fully closed, where vessels continue to pass quietly, at higher cost and under greater risk. Alongside acknowledgment of Iranian power, an uncomfortable conclusion is also emerging: an excessively prolonged blockade could accelerate the development of alternative routes and train the market to operate without Hormuz.

This is where the leverage reaches its limit. It is effective when it is measured, reversible, and can be withdrawn in exchange for a concession from the other side. When used indefinitely, it becomes an incentive to invest in alternatives.

Who Will Make the First Move?

This debate also connects to the central diplomatic question: who moves first?

Inside Iran, the idea of small, reciprocal, time-limited steps is gaining ground. One example would be a cessation of hostilities and an easing of the blockade in exchange for reopening Hormuz and resuming nuclear talks. This is not an official government proposal, but its very appearance in economic and political discourse points to an effort to break out of a cycle in which each side demands that the other make the full concession before taking any action itself.

The same problem exists in the nuclear file. Among the ideas raised is the possibility that Russia could hold part of Iran’s enriched uranium stockpile, alongside the resumption of IAEA inspections. But here too, the real questions begin after the headline: who would own the material, whether it would be returned, when, under what conditions, and what inspectors would receive in return.

There is currently no agreed framework. But the shift toward discussing small, measurable, reversible actions is itself important. Instead of a single agreement intended to solve everything, the question is becoming whether trust can be built through one small first step.

At the same time, there has also been a limited sign of normalization: flights between Iran and Iraq are expected to resume. This is neither a regional settlement nor a breakthrough, but it does demonstrate that even amid confrontation, civilian activity can be restored when specific coordination is possible.

A “New Economic Framework,” but the Public Is Still Waiting for Details

Domestically, the government is increasingly adopting the language of emergency management. At an economic coordination meeting, officials reviewed the currency market, the budget, foreign trade, and inventories of essential goods, and presented a seven-point package.

The problem is that the public still does not know what those seven points are.

The costs, timetable, and sources of funding have not been published. Pezeshkian said that the government had adopted a new framework for managing the “special conditions” and that the adversary had attempted to strike the country’s vital arteries. The language itself is revealing: currency, imports, the budget, and welfare are no longer described simply as economic matters, but as part of a front.

In doing so, the government is signaling that it does not expect a rapid return to normality. But for ordinary citizens, a “new framework” is not an answer until the numbers appear: what will happen to food prices, electricity bills, business credit, and wages?

Damage to infrastructure explains some of the pressure. According to the Oil Ministry, the war temporarily knocked out approximately 230 million cubic meters per day of gas production capacity. Some capacity has already been restored, and repairs to facilities in South Pars are continuing ahead of winter. These are government figures, but even if taken at face value, they illustrate the scale of the damage Iran is being forced to manage.

When the Emergency Reaches Wages, Food, and the Clinic

The economic figures explain why the announcement of a “new framework” alone is not reassuring the public.

According to inflation data published in Iran, annual inflation reached 68.4 percent in September, while the increase compared with the same month a year earlier reached 83.8 percent. Goods prices rose even more sharply.

For wage earners, this is not a macroeconomic statistic. Food, medicine, and everyday essentials are not purchases that can be postponed until the political situation stabilizes. The minimum base wage stands at approximately 16.6 million tomans, rising to around 25 million with allowances. At the same time, the official cost-of-living basket had already been estimated in March at approximately 42.9 million tomans.

Even without accepting the higher estimates put forward by workers’ representatives, the gap is clear: wages are struggling to keep pace with the rising cost of life itself.

Household data point to the same erosion. The real income of urban households has declined, real spending has contracted, and in rural areas some families have been forced to increase spending despite falling incomes. Benefits and government transfers can cushion a temporary decline, but they are no substitute for growth, investment, and employment.

The pressure is also reaching the healthcare system. Representatives of retirees report high out-of-pocket costs, rising medicine prices, and debts owed by the insurance system to hospitals and pharmacies. These figures do not constitute a comprehensive nationwide estimate, but the broader picture is familiar: when the state struggles to finance the system, a larger share of the cost is passed on to the patient.

Meanwhile, gold continues to provide a daily measure of anxiety. A gram of 18-karat gold was quoted at around 26.23 million tomans, and an Emami gold coin at around 270.85 million. These are market estimates, not official rates, but they show where the public seeks protection as the rial and wages lose purchasing power.

A Society Organized from Below and Monitored from Above

Alongside its economic management, the regime continues to build its emergency mechanisms at the neighborhood level. The “Jan-Fada” campaign announced the establishment of 10,000 neighborhood rescue and assistance units.

On the surface, this is a positive form of civic organization: local teams capable of operating during disasters, attacks, or crises. But the campaign is also linked to security training and the ability to mobilize personnel within a national framework. The boundary between civilian resilience and security preparedness is becoming increasingly blurred.

The picture fits neatly with the “new economic framework.” The state wants the government, the economy, and the neighborhood to function as parts of a single emergency system. This may improve response capacity during a crisis, but it also deepens the presence of organized and supervised mechanisms in community life.

Outside the authorized media, the picture is harsher. The HRANA human rights organization reported that at least 59 people were executed during September, alongside hundreds of arrests related to the expression of opinions and dozens of labor protests. These are figures from a human rights organization and have not been fully verified against Iran’s judicial system, so they should be treated with caution. Still, their near absence from the domestic agenda is itself part of the story: while the system speaks of resilience and volunteerism, the machinery of punishment receives almost none of the same media attention.

Trend Assessment: Iran Needs Leverage It Can Stop Using

Iranian discourse at the beginning of October still does not point to a diplomatic breakthrough. Trump is issuing threats without disclosing his decision. Algeria is offering mediation without a framework. Inside Iran, ideas for reciprocal steps are being raised, but they have yet to become official policy. The questions of uranium and inspections also remain far from resolution.

But the question the system is asking is beginning to change.

There is less focus on Iran’s ability to block, deter, and impose costs, and more on the cumulative price of continuing to use that power. Iraq’s move to transfer oil outside Hormuz gives this warning a tangible dimension. Alternative routes are no longer merely a theoretical idea for the future.

The same principle applies inside Iran. The government can declare an economic emergency, but ultimately the public will want to see the seven points, the source of the money, and their impact on food, medicine, energy, and wages. Inflation of more than 80 percent compared with the previous year cannot be contained through a change in terminology.

Iran is seeking to convert the risk it creates externally into relief that can be distributed internally. But diplomatic leverage erodes itself when the world begins building a route around it, just as economic policy erodes public confidence when it is presented as a plan without numbers.

The central question now is not whether Tehran can continue to endure. It is whether it knows when to turn endurance into an outcome.