After five rounds of talks mediated by Oman, Iran has now signalled its rejection of the newest American peace plan, which includes the end of all uranium enrichment, also citing a lack of change in Washington’s position on sanctions. Tehran’s negotiators described the American proposal as ‘completely one-sided’ and a ‘non-starter.’ 

Worse: this diplomatic breakdown comes amid reports that Israel is planning to strike unilaterally.

Tehran’s Impossible Balance

Compared to Iran, Israel greatly increased its already superior military expenditure in 2024, likely with a view to a possible regional conflict.

Iran’s efforts, meanwhile, have largely gone to its nuclear programme.

Its leaders are trying to strike a delicate—perhaps impossible—balance: keeping a nuclear infrastructure for civilian use that comes as close to the line of weapons-grade enrichment as possible, without crossing it. This represents a source of deterrence and readiness in case of escalation, short of triggering foreign intervention.

Iran, it seems, won’t invite Armageddon, but will no sooner give up its nuclear ambitions. 

Despite Israeli cyberattacks and assassinations, the IAEA recently reported a surge in Iran’s enriched uranium stockpile and alleges undisclosed nuclear activity—claims Tehran rejects, even as the E3—Britain, France, and Germany—threaten a return to sanctions by August 2025 if diplomacy falters. And yet, sanctions have not worked before, while the alternative—direct strikes—would solidify Tehran’s siege-mentality and desire to accelerate enrichment. 

Israel’s Strategic Strike

Could further Israeli strikes render Iran unable to do so? Yes, but only temporarily. Iran’s nuclear sites are no easy targets, being largely underground and scattered across the country. 

Of course, that does not mean a unilateral Israeli attack is out of the question, or that it would serve no strategic purpose. There is evidence of preparations for such an action, similar to past pre-emptive hits against Iraq’s Osirak in 1981 and Syria’s Deir ez-Zor in 2007. 

The point? 

Like the April 2024 strike against the Iranian consulate in Syria or the July 2024 assassination of Hamas’ Ismail Haniyeh in Tehran during President Pezeshkian's inauguration, hitting Iran would aim to light a fuse: inciting Iranian retaliation would force the US to get involved. And the involvement of the US military—realistically—is the only path towards eliminating Iran’s nuclear programme.

Indeed, such an outcome is not beyond the realm of possibility. As Iran’s Defence Minister Aziz Nasirzadeh has pledged: ‘If this war is initiated by the US or the Zionist regime, Iran will target their interests, bases and forces.’ Similarly, Foreign Minister Abbas Araghchi warned of a ‘devastating and decisive response’ to any attack. 

America’s Final War

Considering the Iraq War ended up costing the US some $3 trillion, the larger dimensions and capabilities of Iran suggest a crippling economic commitment. Iran’s population of roughly 88 million—nearly double that of Iraq in 2003—coupled with a more sophisticated military and the region’s largest ballistic missile arsenal, represent formidable obstacles. Furthermore, the IRGC and its network of proxies specialise in asymmetric tactics, making any conflict protracted and costly by default.

Although regime change wouldn’t be a primary objective for Trump, the reality is that Iranian nuclear capacities cannot be disabled without committing to more than airstrikes.

Natanz, 200 miles south of Tehran, blends above-ground and subterranean facilities, while Fordow, near Qom, is entombed up to 80 metres underground. Fordow’s defences can resist all but the mightiest bunker-busters, like the US’ Massive Ordnance Penetrator and, even then, rendering the site inoperant would likely require a multi-pronged assault—air raids, cyber-sabotage and, crucially, special forces. Beyond this, and short of regime change, any disabling of nuclear capacities will be temporary, as, again, military strikes will only increase Tehran’s commitment to develop military deterrence.

But even if America holds back from deploying extensive ground forces, if its strikes are severe enough to damage nuclear infrastructure, they will also be severe enough to prompt Tehran to play one of its principal cards: blockade.

A Commercial Nervous Center 

The high costs of such a conflict would be global as much as regional. The Straits of Hormuz and the Red Sea are two of the world’s most vital maritime chokepoints. They account for roughly one-quarter of global seaborne oil and LNG trade. The Red Sea, feeding into the Suez Canal, carries around 10–12% of global seaborne trade, including oil and container shipping. A blockade of either route would force vessels to sail around Africa, adding weeks to voyage times and sharply increasing freight costs. As the Houthis proved during their drone strikes in the Red Sea, this can have a huge impact, especially on just-in-time industrial sectors.

If Iran were to attempt a blockade of the Straits of Hormuz, exports from major Gulf producers could be severely curtailed. Historical analogues such as the 1973 oil embargo suggest that this would drive global fuel inflation. Complicating matters, Iran’s proxy network could open additional fronts, threatening Eastern Mediterranean shipping corridors and Gulf pipelines. The conflict would soon spiral, taking on the new dimension of securing sea lanes, diverting resources from hitting Iran’s nuclear sites. 

Could these blockades last? Maybe not. The Houthis proved able to operate under tremendous pressure, but they’ve faced severe bombing over the past year, and the US and allied navies could ultimately counter Iran’s Revolutionary Guard Corps Navy. 

Yet, even brief disruptions would hit hard. Israel would face higher shipping costs and delayed imports, compounding its economic woes. Concurrently, domestic and international pressure to end the conflict would be severe on Washington. At home—including within the MAGA base—there is no appetite for another foreign quagmire, which won’t be helped by rising energy costs. Voices like Tucker Carlson and Marjorie Taylor Greene are already crying foul, tapping into deep war fatigue. 

Globally, the economic impact of the war would drive a wedge between Washington and its allies, adding to the view that the US is a fundamentally destabilising force. This is true even for Gulf states, to whom Trump’s administration has promised so much, but which also stand to lose a great deal. An Iran War, coming on the heels of the ‘Liberation Day’ tariffs, would also contrast with China’s steady, commerce-first posture and hands-off stance toward others’ internal affairs. Granted, Beijing’s Belt and Road would also be hurt, but China’s image as safeport country would be cemented in the long term. 

The actual cost of an Iran War, then, could be no less than the end of American global hegemony.

Statement

Tensions between Iran, Israel, and the US are accelerating towards confrontation: the US maintains Iran must cease all uranium enrichment and diplomacy has faltered. Signs that Israel is considering a unilateral strike could mean the imminent triggering of a hot war, drawing the US in. Iran and its proxies would retaliate by strangling maritime global trade chokepoints like the Strait of Hormuz and Red Sea. The protracted nature of asymmetrical proxy warfare, the sheer economic cost of this war, the blow to international trade, and domestic US war fatigue could mark the end of American global hegemony.