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Qabil Ashirov

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The world today finds itself navigating the most treacherous waters since the end of the Second World War. As populist radicalism surges across the West and Russia remains mired in the Ukrainian mud, the recent joint U.S.-Israeli military intervention in Iran was expected by many to be the final blow to a teetering regime. Indeed, following the massive domestic unrest that claimed thousands of lives and the subsequent precision strikes on February 28, 2026, which resulted in the death of Supreme Leader Ali Khamenei and dozens of high-ranking officials, the collapse of the Islamic Republic seemed imminent. However, those waiting for a swift regime change were met with a starkly different reality. The religious establishment did not crumble; instead, it demonstrated a resilient institutional memory that has begun to turn the tide of the conflict.

The United States now finds itself in a predicament strikingly similar to that of Russia, which is unable to translate battlefield success into strategic victory. Despite the decapitation of its leadership, Tehran remains defiant at the negotiating table, frustrating every American demand. The central point of contention remains the blockade of the Strait of Hormuz, a move that exposes the fundamental flaw in President Trump’s business-centric approach to warfare. While Iran has undoubtedly lost the war at the tactical and operational levels, it is winning the strategic battle of attrition. Had more seasoned politicians, for example, like George Bush or other previous US presidents, been at the helm, the outcome might have been a total victory, but Trump’s belief that complex ideological systems can be dismantled with mere "transactional" bombardment has proved to be a grave miscalculation.

To understand why this regime persists, one must look beyond the surface of a simple military junta. The Iranian state is built upon a 500-year-old tradition of Shia governance that is not tied to a single clan or ethnicity, but to a deeply rooted social and religious class. For example, while taxation remains one of the most contentious and evaded obligations in the modern world, with individuals globally searching for legal loopholes to protect their wealth, the Shia system operates on a different plane. Across the globe, believers send religious taxes, such as khums and zakat, to their spiritual centers without any legal compulsion. Expecting to topple such a deeply embedded ideology by killing a few leaders or bombing a few cities is not just optimistic; it is historically blind.

Furthermore, Washington’s hubris and its tendency to alienate allies, with the sole exception of Israel, has left it isolated in this confrontation. By disparaging European leaders, the administration has ensured that it must bear the burden of this crisis alone. This isolation is now colliding with the harsh reality of the American domestic calendar. With the 2026 Midterm Elections approaching, the blockade of Hormuz has become a political noose. As oil prices surge past $130 per barrel, the 3.3% inflation rate recorded in March is beginning to erode the administration's standing. Iran’s stubborn refusal to open the strait is, among other strategic motivations, a calculated strike at the American voter’s wallet, aimed in part at ensuring the Republicans lose their grip on Congress.

In response to Iran’s maneuvers, President Trump placed the Strait of Hormuz under a total naval blockade. Specifically, while Iran has been obstructing or demanding exorbitant fees from vessels attempting to exit the Persian Gulf, the United States has retaliated by blocking all ships bound for or departing from Iranian ports, effectively paralyzing Tehran's oil exports. Although this policy appears detrimental to Iran on the surface, it is equally damaging to Trump’s interests. Until now, global oil prices had not breached the $150 mark, partly due to Iran’s limited but ongoing exports. However, with Iranian supply now halted and Russia recently imposing restrictions on its own gasoline exports, the market faces a perfect storm. Furthermore, the surge in oil prices from $70 to $120 had already provided Moscow with additional dividends, a development that prompted Ukraine to intensify its strikes on critical Russian oil infrastructure. If this synchronized disruption continues, the psychological barrier of $150 per barrel will likely be shattered, raising the critical question: how much longer can this process endure?"

External effects: South Caucasus in focus

At the same time, the sharp escalation in oil prices is generating a complex mix of windfall gains and structural pressures for Azerbaijan, a key oil and gas exporter in the South Caucasus. Higher benchmark prices directly boost export revenues from Azeri crude, strengthening fiscal inflows and improving the country’s current account balance. This dynamic provides short-term budgetary relief and expands the government’s capacity for public spending and strategic investment, particularly through energy-driven sovereign reserves.

However, the benefits are not without constraints. Azerbaijan’s production levels remain relatively stable, meaning that revenue gains are largely price-driven rather than volume-driven, limiting the scale of upside compared to larger producers. Moreover, elevated oil prices risk amplifying imported inflation, particularly through higher costs of refined fuels, transportation, and consumer goods, thereby placing pressure on domestic price stability.

In the gas sector, the crisis further enhances Azerbaijan’s strategic importance as a reliable supplier to Europe. As volatility disrupts traditional supply routes, demand for Azerbaijani gas exports is likely to intensify, reinforcing long-term contracts and accelerating discussions on capacity expansion. Yet, this also raises expectations from European partners, potentially pushing Baku toward faster infrastructure scaling and increased output commitments.

Ultimately, while the current oil price surge strengthens Azerbaijan’s macroeconomic position in the short term, it also exposes the economy to heightened volatility, reinforcing the urgency of diversification amid an increasingly politicised global energy market.

In this high-stakes game of geopolitical chess, Tehran has recognized that its strongest weapon is not its now-depleted air force, but the global energy market and the American electoral cycle. By holding the world’s most vital oil artery hostage, Iran is gambling that inflation will eventually force the hand of the U.S. government or lead to a political shift in Washington that will tie the President’s hands.

Taking all the aforementioned factors into account, it is reasonable to expect that the standoff surrounding the Strait of Hormuz will persist at least until the upcoming U.S. elections. One could even go a step further and argue that the fate of this vital waterway—and by extension, the stability of the global energy market—now hinges directly on the ballot boxes in America. The results of the November elections will likely determine whether the world moves toward a diplomatic de-escalation or remains locked in a high-stakes cycle of economic and military attrition.