The failure of the U.S.-Iran negotiations that took place in Pakistan marks a decisive inflection point in the current Middle Eastern security course. This is not a diplomatic setback; it is the transition from a fragile de-escalation phase into a more volatile period defined by coercive pressure, military signaling, and elevated risk of miscalculation. This risk is driven by the threat Iran continues to pose to freedom of navigation in the Strait of Hormuz and by its remaining ballistic capabilities, which allow it to erratically target neighboring Arab states and regional U.S. allies.

Furthermore, the announcement of a U.S.-led maritime blockade over Iranian ports fundamentally alters the operational and strategic landscape aimed at confining the Iranian threat. The main question now is no longer whether tensions will rise, they already have, but whether the current trajectory leads toward controlled escalation, negotiated recalibration, or systemic full-scale conflict.

Structural Drivers of Escalation

At the core of the U.S.-Iran negotiations lies a set of structural but irreconcilable objectives. The U.S. continues to frame its demands around three pillars: curtailment of Iran’s nuclear development program, limitations on ballistic missile capabilities development, and the rollback of Iran’s regional proxy networks. Iran, on the opposite side, views these elements as essential to regime survival and sovereign deterrence. Accordingly, this is not a negotiation gap; it is a strategic contradiction.

Iran’s nuclear posture has evolved from a bargaining chip into a core pillar of the Iran’s Islamic Revolutionary Guard Corps’ (IRGC) and the regime’s survival. Any perceived concession risks undermining internal legitimacy and external deterrence credibility. Accordingly, ongoing diplomatic negotiations are performative rather than transformative, thus aimed at managing escalation rather than resolving underlying disputes. Additionally, the U.S. decision to impose a maritime blockade represents a calibrated escalation designed to exert economic and psychological pressure without the need to immediately resort back to kinetic operations. However, the strategic implications are profound.

Iran’s economy relies mainly on maritime oil exports. A blockade directly targets this vulnerability, threatening revenue streams, which then impacts the domestic stability, in addition to regional influence operations funded through such revenues. From Tehran’s perspective, failure to respond would signal weakness not only to the U.S. but also to its network of non-state groups across the region. This creates a classic escalation dilemma for Iran. On one hand, not responding risks strategic erosion of the IRGC and the current regime’s image. On the other hand, the response risks triggering military confrontation, which Iran cannot withstand. In such conditions, even any Iranian action such as harassment of commercial shipping, or proxy attacks carry a high probability of escalation.

Another key driver for the escalation is the pre-positioned military capabilities. Unlike previous crises, the current environment is characterized by pre-positioned military assets and operational readiness on both sides. U.S. naval, air, and ground forces in the Middle East are already configured for rapid response operations, while Iran’s IRGC maintains asymmetric capabilities are carefully tailored for maritime disruption, drone attacks, ballistic missile launches, and regional proxy warfare.

Regional Spillover Risks

The Strait of Hormuz remains the most critical geographic variable in this confrontational equation given that one-fifth of global oil trade passes through this narrow waterway. Iran has long signaled its capability and strategic intent to disrupt traffic through asymmetric means, including naval mines, drones, and anti-ship missiles. While full closure remains unlikely due to the overwhelming U.S. response it would provoke, disruption has already been taking place via targeted attacks on passing vessels, which is more than enough to deter commercial liners. Even limited interference could generate outsized economic and political effects, particularly for energy-dependent economies. All that said, the Houthis in Yemen remain on standby mode to disrupt the maritime flow via resumption of attacks on vessels passing via Bab-el Mandeb to and from the Red Sea.

Iran’s strategic depth lies not in conventional military parity but in its network of regional proxies. Groups aligned with Tehran, including those in Iraq, Syria, Lebanon, and Yemen, provide Iran with operational flexibility. Given Israel’s successful campaign in Lebanon against Hezbollah as well as the Iran-backed Iraqi militias preoccupied with the deterrence posed by the U.S. forces, the Houthis in Yemen remain the final card for Tehran. Intensified maritime threats from Houthi forces in the Red Sea are likely to reemerge at any moment. This allows Iran to impose costs on U.S. and allied interests without triggering immediate large-scale retaliation. However, the cumulative effect of a multi-chokepoint pressure strategy could compel a broader and internationally supported response.

Strategic Calculus: War vs. Controlled Escalation

Some believe that neither the U.S. nor Iran appears to seek full-scale war given that the costs (military, economic, and political) would be immense and unpredictable. For the U.S., a major conflict with Iran would disrupt global energy markets, divert resources from strategic competition with China, and risk regional destabilization affecting key allies in the Gulf Corporation Council (GCC). For Iran, a continuation of a direct war would expose critical infrastructure to sustained strikes and threaten regime survivability.

The most probable scenario over the next 2–3 weeks is a phase of controlled escalation characterized by maritime harassment incidents in the Gulf, limited proxy attacks, and intensified rhetoric and signaling. This scenario allows both sides to demonstrate resolve while avoiding irreversible steps toward war. However, it is susceptible to disruption by unforeseen incidents at any moment.

An increasingly possible scenario would be one that involves targeted military actions, such as U.S. strikes on IRGC assets or critical infrastructure vs. Iranian retaliatory indiscriminate strikes on U.S. regional allies. Such exchanges would likely be calibrated to avoid full-scale war but could easily escalate if casualties or strategic assets are impacted.

Lastly, a less likely but still possible scenario is the return to productive negotiations, driven by economic pressures including oil market volatility, as well as diplomatic intervention by third parties, including the Gulf states, China, or European actors.

The highest-impact and most consequential scenarios involve a rapid escalation into full-scale conflict, potentially triggered by Iran’s full refusal to give up on its nuclear program or ballistic missile development program. Other triggers for a full-scale conflict would include any major incident in the Strait of Hormuz, high-casualty attacks on U.S. forces, or a direct confrontation between U.S. and Iranian military assets. Such a conflict would likely expand beyond bilateral engagement, drawing in regional actors and severely disrupting global economic systems.

Key Indicators to Watch

Several indicators are going to be crucial in assessing the trajectory of the ongoing conflict. This includes maritime activity where increased Iranian harassment of shipping continues to take place. Proxy operations are also a critical indicator where the frequency and intensity of proxy attacks, and the Red Sea specifically start to rise. Finally, force posture changes remain one of the key indicators, as they are mostly based on advanced intelligence assessments, which are not available to the public or markets. That said, deployment of additional U.S. and allied assets to the region remains the clearest indicator of how the situation will move forward and provides early signs of shifts from controlled escalation to broader conflict.

For defense strategists, the imperative is clear: preparing for escalation, planning for contingencies across multiple theaters, and achieving consensus that in the current environment, the most dangerous outcomes are not those that are intended but those unintended.

Dr. Mohamed ELDoh is a business development and consulting professional in the defense and security sector. Mohamed holds a Doctorate degree from Grenoble École de Management – France, an MBA from the EU Business School- Spain, and an Advanced Certificate in Counterterrorism Studies from the University of St Andrews, UK. He regularly authors articles addressing defense cooperation, counterterrorism, geopolitics, and emerging security threats in the Middle East and Africa. The views of the author are his own.

The Escalation Trajectory of U.S.-Iran Tensions After the Collapse of the Negotiations was originally published on Global Security Review.

In 2022, when Russia first invaded Ukraine, it did not domestically produce any Geran-2 (Shahed-136) drones. They initially purchased a small quantity (up to around 6000) from Iran and quickly set their sights on building manufacturing plants. By 2023 they had the Alabuga drone factory where they were able to produce around 200 Geran-2 drones per month. In 2024, they saw a major increase in production and by December of that year it was reported that they were able to produce up to 2000 Geran-2 drones per month. By May of last year, Russia’s production capacity was up to around 2700 Geran-2 drones and another 2500 ‘simulator’ drones used to overwhelm air defenses in a single month (according to Ukrainian intelligence), and production is likely to increase further.

Mass production of these drones has changed what it means to be ‘war ready.’ A massive reduction in Iran’s arsenal of missiles, air capabilities, and ground capabilities would weaken the regime but Trump’s pronouncement should not convince anyone they are no longer a threat. If Iran follows Russia’s blueprint, even heavy losses today are unlikely to prevent them from sustaining a long campaign of drone attacks tomorrow.

Besides, Iran’s strategy is to delay. They retain the ability to threaten American bases in the Gulf, as well as Gulf allies, with their current stockpile of drones and missiles. From almost anywhere in Southern or Central Iran they can launch a Shahed which could reach the Strait of Hormuz, meaning that even if missile and naval drone production slows, they will continue to threaten global trade flows, should the status quo continue.

Russia’s continuation of the war against Ukraine should have shown to the United States what modern war looks like, and how a state can remain a threat at a low cost. Iran is more than capable of continuing this conflict, and their recent statements reaffirming their lack of interest in diplomacy a makes that clear.

Iran’s current stockpile of Shahed-136 drones has not been made public. Before the war started, estimates indicated it could be up to around 80,000 drones. Considering Russia’s demonstrated ability to create and grow a drone industry whilst at war, there is no reason Iran’s drone industry will not grow similarly. Between 2023 and 2025 Russia’s Geran-2 drone production grew by 1250%. Iran will not require this level of growth and is in a better placed position to start having produced a significant quantity of these drones.

The significance of this threat lies in the unique importance of the Strait of Hormuz to the global economy. A sizable portion (around 25%) of the world’s oil supply passes through the Strait, so even limited disruptions can have huge consequences for energy prices. Crucially, Iran does not need to secure a complete shutdown of the Strait to achieve its aims, as even the threat of attacking merchant ships drives insurance premiums and forces ships to reroute. By demonstrating that the Strait can be reached, Iran has created an atmosphere of uncertainty and can maintain this very atmosphere without their arsenal of long-range missiles by building Shahed-136 drones. In this instance, drones are not strictly a military asset, but a way of exerting economic pressure on adversaries.

Securing the Strait of Hormuz to a point of trade continuation will prove to be almost impossible without either a negotiated settlement or a complete capitulation from the Iranian regime. If during this conflict Iran retains even a small portion of their current Shahed-136 stockpile, or the ability to manufacture them, then ships passing through the Strait cannot be guaranteed safe travel.

In short, claims that the Iranian threat has been significantly reduced are short sighted and ignore many of their existing capabilities. Their existing missile stockpile, combined with their production capacity, means that even heavy strikes will not eliminate their ability to project their power across the region. Just as Russia’s war in Ukraine has demonstrated, modern warfare requires cheap and easily mass-produced systems and Iran is very well positioned to meet these requirements. Until a diplomatic solution is reached, or the Iranian regime is somehow forced to end their war efforts, the threat to world trade and to the world energy market will persist.

Raphael Chiswick writes on Diplomacy, International Security, and the Defense Industry. He is based in the United Kingdom. Views expressed in this article are the author’s own.

From Shaheds to Strait Control: Why Iran Can Still Influence Global Trade was originally published on Global Security Review.

The term ‘diplomacy’ originates from the ancient Greek word diplōma, meaning “an object folded in two,” referring to a document granting travel or special privileges to diplomats. Statecraft is defined as the art of governing state affairs, encompassing diplomacy, economic statecraft, military strategy, and intelligence. Economic statecraft is defined as “the use of economic means to pursue foreign policy goals,” including foreign aid, trade, sanctions, tariffs, and investment to achieve foreign policy goals. While diplomacy relies on negotiation and alliances to further foreign policy, economic statecraft, on the other hand, relies on economic power to achieve foreign policy objectives.

In early human history, relations between groups were often conflictual, with armed confrontation serving as the primary means for achieving strategic advantage. Yet, even in antiquity, diplomacy emerged as a vital tool for negotiation and conflict resolution. The rivalry between the United States and China, unlike ancient rivalries, did not evolve solely due to military power; rather, it is a hybrid of trade, investment, alliances, and military strength.

China has rooted its diplomacy in trade and economics, stretching its relationships from Asia to Africa and reviving the old Silk Road that was once a symbol of China’s economic dominance. By using economic diplomacy as its foreign policy tool, China can open new markets and build alliances. Elsewhere in the Western Hemisphere, China is becoming the most important trade partner, with the likes of Argentina, Brazil, and Colombia now shifting towards China despite being traditional allies of the United States.

The United States’ current diplomacy is evolving in the use of economic statecraft as well, through sanctions, tariffs, and foreign investment based on coercion and compliance. If that can be successful in achieving the U.S. foreign policy objective and the interest of the U.S. national security, it is apparent that the strategy is limited, as it does not have global reach. While states may comply with the U.S. policy based on fear of retaliation, success from this method can be limited; as in international relations, states can balance or bandwagon. By analyzing the global politics of small states in the south, the U.S. economic statecraft and boat diplomacy may push them towards balancing towards China.

Robert J. Art and Robert Jervis, in International Politics: Enduring Concepts and Contemporary Issues, argue that “force can be used to take or to bargain. If you can take what you want, you do not need your adversary’s cooperation and do not have to bargain with him. A country may use force to seize disputed territory just as a robber may kill you to get your wallet. Most of the things people and nations want, however, cannot be taken in this way. A nation may want others to stop menacing it; it may even want others to adopt its values. Brute force alone cannot achieve these goals.”

Coercion has been a tool of U.S. economic statecraft in foreign policy for a long time. However, history shows that it has clear limitations, especially in great power rivalry. In the U.S.-Japan rivalry leading to World War II, Japan achieved early military successes, but its overextension and limited industrial base prevented long-term strategic victory. Rather than deterring Japan, U.S. sanctions intensified its aggression, illustrating again that economic pressure can provoke escalation rather than prevent it. Coercive tools such as economic sanctions and tariffs, while a game-changer, cannot alone secure a strategic victory.

For deterrent purposes, economic sanctions historically have not prevented rogue states from changing their behavior. It did not prevent North Korea from developing long-range ballistic missiles, just as it was not successful in changing Iran’s human rights behavior and nuclear ambitions. Rather than punitive deterrence, what ultimately works in Iran is deterrence by denial, as initial punitive measures did not suffice highlighting the limitations of economic statecraft in power competition. Punitive deterrence will not prevent a new power from rising, as described by Alison in Thucydides’ Trap, nor will it prevent weaker states from balancing against strong ones. It did not prevent the rise of China, and it will not prevent the rise of other future powers. What has and will make deterrence effective is the innovation of the U.S. nuclear triad, extended deterrence, and international cooperation through diplomacy.

Contemporary politics reflects the same pattern. Russia’s military power has not secured a decisive victory in Ukraine, and economic sanctions, either targeted or sectoral, have not changed Russia’s posture. As noted by the Council on Foreign Relations, “The United States began its 2022 barrage of sanctions by freezing $5 billion of the Russian central bank’s U.S. assets, an unprecedented move to prevent Moscow from using its foreign reserves to prop up the Russian ruble.” While sanctions in other sectors, such defense and energy, have been seriously targeted, the war is still ongoing. In the same vein, the U.S.–China competition and tariffs imposed on Beijing have failed to change China’s behavior as described by Global Trade Magazine, “China’s annual trade surplus passed $1 trillion, a record high, with a GDP growth remained steady at around 5%.”

It is paramount that the United States develop a hybrid strategy, combining diplomacy and other tools of statecraft to keep its leadership on the global stage, as opposed to relying on power.

While coercion and deterrence are important in great power rivalries, the current global landscape does not favor such a posture. There is a need to consider economic diplomacy as the main tool of U.S. foreign policy and economic statecraft as a second, as a future war will not be determined by military strength but by the mixture of both economic and military might.

Hafiz Ibrahim is a Ph.D. student at Virginia Tech’s School of Public and International Affairs, specializing in political economy, global security, and African-U.S. affairs. His professional experience includes serving as a Defense Trade Analyst government contractor at the U.S. Department of State, as well as working previously at Deloitte Consulting as a Sanctions Analyst. Views expressed in this article are the author’s own. 

Diplomacy in Great Power Competition and the Limits of Economic Statecraft was originally published on Global Security Review.