Across ages, scholars of war have returned to a deceptive yet simple question: what does it mean to win? Andrew Mack’s seminal work on asymmetric conflict showed why materially superior powers can lose “small wars” when battlefield dominance fails to produce the desired political outcome; in a later work, Ivan Arreguín-Toft argued that the interaction of strategies, rather than the balance of capabilities alone, often determines who prevails. Mary Kaldor’s formulation of “new wars” complicated the verdict further—contemporary conflict is sustained through dispersed networks, coercive economies and forms of violence that can persist beyond conventional campaigns. Analysed against this literature, the war with Iran has merely changed form and doesn’t offer a verdict on defeat or victory as yet.
While a successful military campaign by the US couldn’t fetch strategic outcomes, the IRGC’s capacity to survive and disrupt does not mean that Iran has escaped an enormous cumulative cost either.
The Iran–Iraq War offers Tehran’s own warning. Today, the IRGC’s perseverance in sustaining eight years of bombing without regime change or territorial disintegration is invoked repeatedly. The Revolutionary Guard emerged more powerful and more radicalised, and yet Ayatollah Khomeini described accepting UN Resolution 598 as worse than drinking from a poisoned chalice. Survival and institutional consolidation could not be conflated with strategic success.
That distinction remains useful. This war should be assessed along three separate axes: operational control, economic endurance and regional re-balancing.
On the first axis, the United States retains overwhelming force and Iran retains disruptive capabilities. On the third, neither has compelled the other, but the regional actors themselves are looking at diversification from Hormuz and newer geometries of deterrence—the Mecca Pact being the latest in the offing.
It is the second—the economic warfare—that is changing fastest and is the subject of today’s column.
There are two crucial players in this context – US’s successive measures, and the UAE, whose measures could inflict a more immediate and deeper economic shock to the IRGC—deploying a lever Abu Dhabi had avoided over the past six months.
Double blockade woes
The Trump administration’s rhetoric remains maximal. Treasury Secretary Scott Bessent has promised the “toughest sanctions in history” and a “one-two punch” of sanctions alongside the naval blockade. Trump’s Truth Social remains explosive—“Economic D-Day”, “Economic Warfare” and severe consequences for any country providing Iran “any type of lifeline”. Yet, slogans are not strategy. Economic coercion works through specific nodes—oil loadings, payments, shipping registries, insurers and third-country banks—and depends on whether allies and buyers cooperate.
However, beyond Trump’s diatribe, physical evidence is consequential. Kpler’s pre-war data showed that Kharg Island handled 94 per cent of Iran’s crude exports over 12 months, at about 1.52 million barrels a day. Jask, outside Hormuz, was designed as an alternative, but its effective capacity is estimated at roughly 300,000 barrels a day, and it has been lightly used.
The latest Kpler updates make the war-cost visible for Iran. Its own crude loadings fell from 893,000 barrels a day in July to 156,000 through 17 August. Kharg’s western terminal resumed limited activity on 12 August after a 25-day pause; the eastern terminal remained empty and tankers were still waiting offshore. The IRGC can boast of control of Hormuz for others and with desired effect too, but it has been able to do little about the US blockade on its own.
Axios reported this week that the US military has ‘quietly organized’ a southern channel along Oman’s coast, with 15–20 tankers entering and leaving nightly. Two unnamed US officials said flows had approached 10 million barrels a day. The operational claim is somewhat plausible: escort schedules, air cover and degraded Iranian surveillance can create a protected lane, but the volume claim is not yet established. Many have accused Axios of overstating facts.
Kpler counted only nine commodity-vessel transits on both Tuesday and Wednesday, against roughly 130-140 ships a day before the war. Some vessels may, of course, be running with transponders switched off. Its crude-flow data also recorded 2.77 million barrels a day for the week beginning 27 July, 1.74 million for the following week, and a wartime weekly high of 6.98 million.
These datasets do support the existence of an alternate corridor, as Axios revealed, but do not support the claim of 10 million barrels a day.
Dark transits, ship-to-ship transfers and differences between cargo loaded and cargo cleared make maritime accounting unusually difficult. The correct conclusion is narrower.
Iran’s own loadings matter more than rhetoric about whether the Strait is “open” or “closed”. A chokepoint can be militarily contested, legally open, commercially avoided and economically constricted at the same time. If Iranian oil cannot leave Kharg at scale, or its proceeds cannot be converted and repatriated, the double blockade becomes a double-edged sword.
Emirati secret weapon
The second pressure front is Emirati. After the UAE intercepted two ballistic missiles launched from Iran on 18 August—that fell into the sea—Abu Dhabi halted all trade, commercial exchange and financial transactions with Iran until further notice. The role of the UAE as a safe haven for the IRGC elite’s money has been mentioned intermittently, but never really been analyzed enough. Neither has its trade relationship with Iran been followed through.
WTO data show that in 2024 the UAE supplied $21 billion (30.6 per cent) of Iran’s merchandise imports and received $7.16 billion (12.8 per cent) of its exports. Iranian customs data for the year ending March 2025 present an almost identical pattern: the UAE supplied $21.9 billion, about 30.3 per cent, of Iran’s non-oil imports and received $7.2 billion, about 12.4 per cent, of its non-oil exports. Nearly one-third of Iran’s imports continued to pass through the Emirati gateway.
To understand the leverage, one must revisit and analyse some more history. Dubai’s Iranian connection predates the UAE federation. Southern Iranian merchants helped build its commercial class in the early 20th century. The 1979 Revolution and the Iran-Iraq War brought new migrants and refugees. Today, not many remember that during that war Abu Dhabi and the UAE, at large, leaned towards Iraq while Dubai remained a transit point for Iran. After Dubai opened its property market to foreigners in 2003, real estate offered varied investments. By 2010, re-exports to Iran were worth $8.58 billion—almost 17% of all UAE re-exports. Geography, free ports, exchange hubs and family networks made Dubai an efficient interface between a sanctioned economy and global trade.
It was a dual system and not just the Emirates helping the IRGC to evade sanctions. Abu Dhabi was security-minded and closely aligned with Washington; but Dubai monetized its openness. Legitimate trade coexisted with hawala settlements, trade mis-invoicing (basically money laundering), front companies, property and, eventually, cryptocurrency. The arrangement also functioned as an insurance policy for the UAE: access for Iranian business and elites reduced the incentive to threaten the hub that held the IRGC’s commercial oxygen.
There is enough evidence now to support the claims made above. In July, a Reuters investigation found that an unlicensed Dubai crypto exchange, Shelbit, had processed at least $4 billion since May 2024, including flows connected to more than 2,000 gambling sites, Iran’s central bank and wallets that Israel later linked to the IRGC. Reuters could not establish direct IRGC control; Dubai’s regulator had fined the firm and later ordered it to stop. Separately, the US Treasury identified UAE fronts and networks moving or holding hundreds of millions for sanctioned Iranian banks.
In June, it was reported that intermediaries had discussed unlocking at least $10 billion for Iran in return for an end to attacks on the UAE, but Abu Dhabi categorically denied that any frozen funds were released or facilitated. The report nevertheless documented visits between senior IRGC and Emirati officials and Iranian-linked deposits immobilised in Dubai banks. Two months later, the missile incident and earlier attacks on ADNOC-linked shipping show that the UAE’s long-standing insurance policy is not working. It also shows that the UAE suspending all trade and commercial activity with Iran is a larger blow to the IRGC than usually perceived.
What economic pressure can—and cannot—do
Economic strangulation will not automatically remove the regime. Four decades of sanctions have produced an adaptive architecture of discounted oil, independent refiners, shadow tankers, hawala, gold, front firms and crypto.
But adaptation is not a free lunch. As is happening now with the continuing US naval blockade and UAE decisions, the cost could be staggering even as the IRGC tries its best to obscure and downplay it.
The war, thus, has changed its form.
Swasti Rao is a Consulting Editor (International and Strategic Affairs) at ThePrint. She tweets @swasrao. Views are personal.
(Edited by Prashant Dixit)