When the United States and Israel opened their joint air campaign against Iran on Feb. 28, a confident forecast traveled alongside the bombs: the Islamic Republic, already brittle, would not survive the economic shock. Strangle its oil revenue, the argument ran, and a regime running on fumes would buckle within weeks.
A former U.S. Treasury official at the Foundation for Defense of Democracies estimated that the combination of a U.S. naval blockade and the closure of the Strait of Hormuz was costing Iran roughly $435 million a day in combined economic damage, with long-term oil revenue losses of up to $14 billion a year. Analysts warned that as Iran’s storage tanks filled and it was forced to shut in its wells, the fields themselves could be ruined: forced shut-ins, one widely shared technical assessment held, could break reservoir pressure within days and leave hundreds of wells permanently damaged. Iran’s own central bank was quoted putting the rehabilitation timeline at at least 12 years. On Fox News in mid-March, historian Victor Davis Hanson predicted the regime would “fall pretty soon,” within “two, three, four weeks,” if President Trump saw the campaign through.
More than three months later, the regime is still standing. Iran’s economy is, by almost every measure, in severe distress. But the chain of cause and effect the predictions relied on — oil revenue collapses, the treasury empties, the state fails — has not closed.
The central miscalculation was about oil, and it cut in a direction few of the forecasts anticipated. The war was supposed to cut Iran off from its customers. Instead, it kept the oil moving while making it more valuable.
Iran responded to the strikes by turning the Strait of Hormuz into a weapon, attacking tankers and effectively choking off exports from its Arab Gulf neighbors. Since late February it has targeted at least 16 vessels, and most commercial traffic through the strait — the route for roughly a fifth of the world’s oil — has been halted since early March. But Iran did not choke off its own shipments. Through March it kept loading about 1.5 million barrels of crude a day, with China receiving roughly 1.25 million barrels daily, according to Kpler data — figures that flatly contradicted the premise that Tehran’s oil lifeline had been severed. By one estimate, Iran exported well above 16 million barrels in the first weeks of the war, much of it on “dark” tankers evading Western oversight, with China the dominant buyer. Iran even loaded a two-million-barrel cargo from Jask, its one export terminal that sits outside the Strait of Hormuz.
The price effect compounded the problem for the strategy. By choking the strait, Iran helped drive Brent crude past $100 and at times above $120, in what the International Energy Agency called the largest supply disruption in the history of the global oil market. That meant the barrels Iran was still smuggling to China fetched far more than they had before the war. The result was the conflict’s defining economic irony, captured in prediction-market commentary that Iran’s fundamentals were deteriorating even amid record oil revenues. A blockade designed to drain the treasury was partly self-defeating: the same blockade that constrained volumes inflated prices.
This is not to say the blockade has completely failed. Al Jazeera, citing analysts, reported in early June that the U.S. naval blockade had bled Iran of nearly $6 billion in oil revenue, with the effect being less to halt production than to interrupt the flow of money — painful over time, but not an immediate shock. The pain is real and accumulating. It is simply slower and shallower than the daily-loss math implied.
The most dramatic prediction — that shutting in wells would permanently destroy Iran’s oil fields — has also not happened. The prediction was technically grounded: idle wells can suffer pressure loss, water intrusion and wax buildup that make restarts slow and expensive. But the most recent expert assessments are markedly more measured than the springtime alarm. The Center on Global Energy Policy at Columbia University noted this month that while there is anticipation that shut-ins will damage facilities or permanently reduce capacity, the reality is that Iran has shut in production before without serious repercussions, as have other producers, though gas production is more vulnerable because associated liquids have nowhere to go.
That distinction matters. The clearest, most verifiable damage to Iran’s energy sector has come not from idle wells but from direct strikes. An Israeli attack on the South Pars gas field and the Asaluyeh refinery on March 18 damaged an estimated 12% of Iran’s total gas production and knocked out two refineries, with satellite imagery showing one refinery nearly destroyed. The bombs did what the blockade’s geology was supposed to do — but to gas, not the crude wells whose ruin had been forecast.
None of this means Iran is weathering the war comfortably. The domestic picture is genuinely dire, and here the predictions were somewhat right. Food inflation, already at a 64% annual rate in October, hit 105% by February, pushing overall inflation to 47.5% on the eve of war; the rial, which had lost about 60% of its value after the 2025 12-Day War, slid further; and the central bank was forced to issue its largest-ever denomination, a 10 million rial note. One security-firm estimate put cumulative infrastructure damage at $200 billion to $270 billion. Oil and energy ordinarily supply around a quarter of government revenue, and oil exports were worth at least $30 billion last year, a base now under sustained attack.
But economic devastation and regime collapse are not the same thing, and conflating them is a recurring analytical error. As the Arab Center in Washington argued, Iran’s revenue once fell from $115 billion in 2011 to just $8 billion by 2020 under sanctions, even as the share of non-oil exports rose from 27% to 78%, and the regime survived. The Middle East Institute made the structural point directly: years of sanctions forced Iran to build evasion networks and alternative routes that reduce its vulnerability to sudden shocks, making short-term collapse less likely, with China’s continued willingness to buy the decisive variable.
The clearest evidence that economic pressure has not translated into political fracture is that the regime absorbed a blow far heavier than any budget shortfall. Supreme Leader Ali Khamenei was killed in U.S.-Israeli strikes in February, yet a rapid constitutional succession maintained institutional continuity, security forces showed no significant defections, and unrest was suppressed. The Congressional Research Service observed in late March that Iran had withstood the initial attacks without collapsing, and its leaders signaled no intention of backing down. Prediction markets reflect the shift: traders have priced the regime’s survival through 2027 at roughly 87.5%, and a separate market on a near-term fall sat in the low double digits.
It is a familiar pattern. In 2018, senior officials in the first Trump administration were convinced that renewed oil sanctions could hasten the regime’s demise, citing inflation and protests, while European allies and U.S. intelligence saw wishful thinking and a leadership that remained firmly entrenched. The regime did not fall then either.
The case is not closed, and honest analysis cuts both ways. The war is ongoing, the blockade is real, and attrition compounds. The slow bleed of oil revenue, the gas-sector damage the energy experts flag as the genuine vulnerability, and the grinding cost of running a wartime economy could yet force the concessions the pressure campaign was meant to extract. The CRS itself noted that if Iran concluded it could not sustain itself, it might bargain. A faction inside the regime, the death of the new supreme leader, or a fuel crisis that reignites mass protest remains plausible. Strategists like those at GlobalSecurity argue Iran now faces a convergence of economic, military, diplomatic and succession crises without the stabilizing conditions of past protest cycles. Three months is not a verdict.
What the three months do show is that the specific theory advanced at the war’s outset — that the arithmetic of daily losses and ruined wells would topple Tehran on a timetable of weeks — has not held. The oil kept flowing east. The war it was waging lifted the price of that oil. The wells did not irreparably fail. And a regime that buried its own supreme leader did not fall.
(YWN World Headquarters – NYC)
