So far, the Iran war has cost the United States 800 casualties, tens of billions of dollars, hundreds of damaged or destroyed buildings on U.S. military bases in the region, and a drawdown of munitions that is straining supplies. Fuel prices have risen sharply since the start of the war, pushing U.S. inflation to a level last seen in 2023. According to polls, most Americans do not believe there was “sufficient reason” for the United States to attack Iran, and public opposition to the war has increased over time. And there is little sign that the fighting is coming to a close. As of now, the Iranian regime seems disinclined to cease its attacks on shipping in the Strait of Hormuz, stop its regional proxies from attacking elsewhere, or curb its nuclear program.
What should the United States do now?
So far, the Iran war has cost the United States 800 casualties, tens of billions of dollars, hundreds of damaged or destroyed buildings on U.S. military bases in the region, and a drawdown of munitions that is straining supplies. Fuel prices have risen sharply since the start of the war, pushing U.S. inflation to a level last seen in 2023. According to polls, most Americans do not believe there was “sufficient reason” for the United States to attack Iran, and public opposition to the war has increased over time. And there is little sign that the fighting is coming to a close. As of now, the Iranian regime seems disinclined to cease its attacks on shipping in the Strait of Hormuz, stop its regional proxies from attacking elsewhere, or curb its nuclear program.
What should the United States do now?
In broad strokes, there are three options. First, ramp the war back up. Some—including U.S. President Donald Trump—have floated the idea of returning to a full-scale bombing campaign similar to what we saw during the conflict’s initial phase. Others have proposed escalating the war, for example by using ground forces to seize Iranian territory.
At the other end of the spectrum lies a second option: The United States could walk away from the conflict. Even Republican supporters of the Trump administration have increasingly called for an end to the war.
The third option is to stay the current course: Maintain the blockade and economic pressure campaign, respond with force when Iran or its proxies strike U.S. or partner targets, and push for negotiations that would reopen the Strait of Hormuz and end the Iranian nuclear program. Of the three options, this may be the least satisfying; it almost certainly will not bring quick results. But it is strategically prudent.
As messy as the conflict has been, the U.S. blockade of Iran and the wider Operation Economic Outcast are going in the direction that the United States wants. Iran is imploding economically. Its currency recently traded at 2.5 million rials to the dollar, a dramatic depreciation from about 630,000 to the dollar in 2024. Inflation has recently reached almost 90 percent, with food inflation at almost 130 percent. Moreover, Iran’s floating oil storage—a shadow fleet of tankers anchored outside the Strait of Hormuz, whose cargo has mitigated some of the effects of the blockade—is now depleted. That further increases the pressure on the Iranian economy.
Although the U.S. spot price has risen above $100 per barrel at times, oil is still priced well below previous peaks once you adjust for inflation. Middle Eastern crude is also again flowing out of the region at near prewar levels, although other critical commodities—liquefied natural gas, refined fuels, fertilizer—remain bottlenecked.
To be fair, economic coercion—even when it causes a full economic crisis—has a mixed track record in effecting regime change. Major economic dislocations have sometimes led to dramatic changes in government, as in Yugoslavia following years of economic problems in the 1980s. Inflationary crises can facilitate democratization, as happened in much of Latin America in the 1980s. But in other cases, such as the U.S. pressure campaigns against Cuba and North Korea, the regimes were still able to use what resources they had to maintain their hold on power.
The history of the last Iran nuclear deal shows that economic pressure campaigns have a better record when they are aimed at achieving more modest objectives. In that case, mounting economic duress forced even the Iranian regime’s hard-liners to the negotiating table. This time around, the regime seems even less inclined to make concessions, at least judging from its public statements, but the pressure campaign is also more extreme.
The primary downside to maintaining the current approach is that it is unlikely to lead to a swift resolution of the conflict. Strategies built around economic pressure generally take months or even years to succeed. But time is on Washington’s side. The blockade is continuing to bite under economic conditions that some deem “unbearable,” with unemployment rising and this year’s GDP projected to shrink by 7.6 percent. If Iran can stabilize its economy, the United States will need to alter its approach. But if not, the Iranian regime—as fractured and hard-line as it may be—will sooner or later need to compromise to avoid collapse.
Moreover, the alternatives to staying the course are worse. Resuming a full-scale war to “blow the entire nation up” is unlikely to be feasible. Even if we bracket concerns over U.S. weapons stockpiles, air campaigns alone have rarely succeeded in overthrowing a government. Plus, given the intensity of the bombardment in the opening weeks of the war, it’s hard to imagine what more the United States could do from the air that would tip the balance. Removing the Iranian regime by ground power would be a Herculean undertaking: Compared with Iraq, the site of the last major U.S. war in the region, Iran has nearly double the population and almost quadruple the territory.
Returning to large-scale conflict would also come at a cost. Despite the effectiveness of the bombardment from February to April, Iran still has the ability to produce missiles and drones. U.S. military casualties stand at 15 killed and more than 800 800 wounded, a figure that would almost certainly rise if the conflict intensified. Similarly, the war has already taken a toll on military equipment and bases in the region, and more damage would be incurred if the conflict flares up again. Then there are the less tangible costs, such as the erosion of Washington’s global reputation, especially if military strikes hit civilian infrastructure.
Then there is the global economic cost of a renewed large-scale conflict. Analysts estimate that it could take years to fully repair the damage to the Middle East’s energy infrastructure that has occurred so far. A return to hostilities would risk further damage to these already battered facilities, not to mention the prospect of even higher energy prices.
More modest military options also come with significant risks. The most widely discussed option is the seizure of Kharg Island, an island around 20 miles off the Iranian coast that serves as the country’s hub for 90 percent of its oil exports. This would aim to either destabilize the regime or use the island as a bargaining chip in future negotiations. Although the United States certainly has the capacity to seize the island, the challenge would be holding the territory afterward. The island is well within range of Iranian missiles and drones, leaving any troops stationed there and resupply efforts vulnerable to attack. Air defenses provide only a partial solution, so the United States would likely sustain casualties. This would also create political pressure on the United States to abandon the island prematurely—before it could pressure Iran into a lasting settlement.
Walking away from the war, by contrast, carries its own costs. Iran has so far rejected proposals to allow the free passage of global exports through Hormuz in exchange for an end to the blockade. Unilaterally dropping the blockade would effectively leave the Strait of Hormuz in Iranian hands, allowing the regime to tax transiting ships as it sees fit. Iran has reportedly stated that it wants to charge oil tankers approximately $1 per barrel—or about $2 million per ship—for safe passage. Iran could use that revenue to strengthen the Islamic Revolutionary Guard Corps’ coercive control over the state and fund its proxy militias across the region. This would also grant Iran a powerful economic weapon to wield in the future and leave the United States with less leverage in negotiations over Iran’s nuclear program.
Furthermore, a unilateral U.S. withdrawal would have repercussions across the region. The Iran war is not the only violent conflict in the Middle East today. Others include the Israeli-Iranian conflict, the Israeli-Palestinian conflict, the Yemeni civil war, the Saudi Arabia-Houthi war, ongoing Iranian attacks on Iraqi Kurdistan, and Sunni jihadist terrorism. None of these go away if U.S.-Iran war ends, and some may even intensify. After all, Iran would perceive a U.S. withdrawal as a win against its superpower archrival, leaving it emboldened to act with greater freedom across the region. With the blockade lifted, Tehran could resume funding its various proxy groups, which have been weakened by the effects of the war. That would be bad news for regional stability, global energy prices, and U.S. inflation.
The fallout wouldn’t stop there. Iranian malign activity spans the globe. Hezbollah, an Iranian proxy group, is active in Latin America. Iranian officials tried to assassinate senior U.S. officials inside the United States. Most recently, Iran was allegedly behind an attempt to attack a Royal Air Force base in Britain and a number of other plots targeting civilians in Europe. Unbound and bent on revenge, Iran is unlikely to be contained to just one corner of the globe.
Walking away from Iran could also exacerbate the United States’ other strategic problems. As China, Russia, and North Korea become increasingly aligned with Iran and each other, a victory for Tehran would benefit them all. Iran has supplied Russia with drones for the latter’s war in Ukraine and recently deepened its military cooperation with the Kremlin. Iran also enjoys close ties with China, providing it with energy and buying Chinese dual-use technology. After a perceived victory over the United States, Iranian cooperation with both countries would only strengthen. Adversaries would also point to this as evidence of the United States’ abandoning its allies in the Middle East, which would certainly not help rehabilitate Washington’s international reputation.
Sticking with the current approach is unlikely to result in a clean and quick end to the war. But sometimes an imperfect option is actually the right one—if only because the others are that much worse.