Iran’s Hormuz leverage globalises the conflict but risks isolation, economic fallout, and regional backlash, underscoring the need for maritime norms and renewed diplomacy
Published Date – 13 April 2026, 04:21 PM
By Brig Advitya Madan (retd)
The failure of the latest round of negotiations between Iran and the United States should not come as a surprise. If anything, it reflects the structural depth of disagreements that have long defined this relationship. These were not tactical gaps that could be bridged over a few rounds of talks; they were fundamental divergences rooted in security perceptions, economic pressures and, above all, a profound trust deficit.
At the core lies the unresolved nuclear question. Iran’s insistence on retaining its uranium enrichment programme continues to collide with Washington’s demand for verifiable limits. Layered onto this is the equally contentious issue of sanctions relief. Tehran seeks immediate access to its frozen assets and economic normalisation, while the United States prefers a phased approach tied to compliance. This sequencing problem has historically derailed diplomacy, and it remains unresolved.
Point of Contention
Equally significant is the emergence of the Strait of Hormuz as a central point of contention. Iran increasingly views Hormuz not merely as a geographic feature but as strategic leverage—hinting at control mechanisms, even the possibility of imposing costs on passing vessels. This stands in direct opposition to the long-standing global consensus that these waters must remain open for free navigation.
Add to this the regional dimension — particularly tensions linked to Lebanon, ceasefire dynamics, and questions of accountability — and it becomes evident why negotiations faltered. Trust, already fragile, could not sustain such a wide spectrum of disagreements.
Yet, the collapse of talks does not signify the end of diplomacy. Negotiations of this nature are inherently iterative, unfolding over months, even years. In the immediate term, a fragile ceasefire is likely to hold, if only because both sides appear to be searching for an exit from escalation.
Shifting Narrative
What is striking, however, is how the strategic narrative has shifted. At the onset of the conflict, Hormuz was peripheral to the discourse. Today, it is the centre of gravity. This transition indicates that Iran has, at least temporarily, seized the initiative. By foregrounding Hormuz, it has reframed the conflict— from a bilateral confrontation to a global economic concern.
But such leverage is inherently limited. Disrupting Hormuz is not a cost-free strategy. It places pressure not only on adversaries but also on neighbouring Gulf economies and major Asian consumers of energy. Nearly 89% of the oil passing through Hormuz is destined for Asian markets, making countries such as India and China particularly vulnerable.
For India, the implications are immediate: a significant proportion of its LPG imports — nearly half — are sourced from this region, much of it transiting through Hormuz. Any sustained disruption would translate into higher energy costs and economic strain.
Troubling Precedent
Recent developments have further complicated the situation. The United States has signalled an intention to monitor and potentially block vessels suspected of complying with Iranian demands, including the payment of transit-related charges. This introduces an unprecedented layer of contestation —effectively placing two actors in a position to influence maritime movement through a single chokepoint. The logistical feasibility of such enforcement, however, remains questionable.
The Strait, though narrow at approximately 33 kilometres at its tightest, is a high-traffic international waterway. Policing it comprehensively would require enormous naval resources and coordination.
Moreover, this sets a troubling precedent. If strategic waterways such as Hormuz become arenas for unilateral control, it raises broader concerns about other chokepoints —from the Strait of Malacca to the Bab el-Mandeb. The global trading system relies on the principle of open seas; any erosion of this norm risks cascading disruptions.
The economic consequences are already being felt. Reports suggest that vessels have been compelled to pay substantial sums — running into millions of dollars — to ensure safe passage. Such practices, whether coercive or precautionary, add to shipping costs and, by extension, global inflationary pressures. For energy-importing regions, particularly in Asia, the impact could be severe despite the existence of strategic reserves.
At a strategic level, Iran’s use of Hormuz as leverage may ultimately prove counterproductive. While it provides short-term bargaining power, it risks long-term isolation. Gulf countries, already uneasy, may increasingly align against such tactics. Indeed, there are indications of growing frustration within the region, with some states even hinting at the possibility of stronger responses.
This is where the concept of diminishing returns becomes relevant. The more Iran relies on disruption as a tool, the more it risks alienating not just adversaries but also potential partners. In the long run, such a strategy may weaken its position rather than strengthen it.
The United States, for its part, appears to be recalibrating its approach. Rather than direct intervention, the emphasis is on containment — managing escalation while avoiding deeper entanglement. This reflects both strategic caution and domestic political considerations. Similarly, Iran, despite its assertiveness, appears aware of the risks of overextension. The result is a paradoxical situation where both sides project strength while quietly seeking an off-ramp.
The nuclear dimension further complicates matters. Technically, Iran is closer than ever to weapons capability. Once enrichment levels cross the 80% threshold, the transition to weapons-grade material becomes relatively swift. Yet, Iran’s calculus is likely shaped by regional consequences. A rapid move towards weaponisation could trigger a broader proliferation cascade, particularly among Gulf states.
Meanwhile, non-state actors such as Hezbollah continue to inject volatility into the equation. Operating beyond the full control of state institutions, they complicate efforts at de-escalation. Israel, too, may view the current moment as an opportunity to recalibrate its regional posture, particularly vis-à-vis Hezbollah.
Regional Alignments
Ultimately, the crisis extends beyond immediate hostilities. It is, at its core, about the future balance of power in West Asia. Who emerges with a strategic advantage? How will regional alignments evolve? And can a sustainable security architecture be built?
For countries like India, the stakes are significant. Energy security, economic stability, and maritime access are all directly affected. While India has so far managed to navigate these disruptions, prolonged instability would necessitate recalibration.
The path forward lies in collective action. The international community must reinforce the principle of open maritime commons while encouraging a return to structured diplomacy — potentially through frameworks such as the Joint Comprehensive Plan of Action or its successor.
For Iran, the choice is equally consequential. Leveraging Hormuz may yield immediate gains, but it also risks strategic isolation. In a region already marked by volatility, long-term stability will depend not on coercive leverage but on cooperative frameworks.
The current moment, therefore, is not merely a crisis — it is a test. A test of whether regional and global actors can move beyond short-term tactics towards a more sustainable equilibrium. The window for such a shift remains open, but it is narrowing.
(The author commanded 15 Punjab in Lebanon in 2007 and Brigade/Sector in Manipur as DIG in 2013. He was Brigadier Operational Logistics Western Command in 2014)
