The White House has been quietly apprised by the CIA that the blockade of Iran isn't going to happen quickly enough, and Tehran doesn't need to blink.

The narrowest part of the Strait of Hormuz is 33 miles across. For decades that stretch of water between Iran and the Omani coastline has been the bloodstream of the world's industrial engine. It carries 1 of every 5 barrels of oil traded on the planet. It is the route of 20% of the world's liquefied natural gas shipments. It's not a trade route, it's just a fact of life for the world's economy — and it is a war zone right now.

The war that began on Feb. 28, 2026, when US and Israeli forces attacked Iranian territory killing Supreme leader Ali Khamenei, has changed the energy landscape, which is yet to be fully digested. Iran's IRGC immediately shut the strait to transits by non-Iranian shipping and a few weeks later the world's largest container shipping companies (Maersk, CMA CGM, Hapag-Lloyd) banned all shipping transits. By early March, Iraq and Kuwait had already started to restrict oil output as there was nowhere for them to sell their oil. Nearly 20 per cent of the global supply of oil had been cut from the market in one stroke.

A complete shutdown on the oil supply is estimated to cut global oil supply by nearly 20 percent, which is equivalent to about 80 percent of the world's oil supply that normally goes to Asia, and could drive up the price of West Texas crude to $98 per barrel, while reducing global GDP growth by between 2.9 and 3.0 percentage points annually. Indeed, the real-world number has been even worse: Brent crude futures have been running ahead of $101 a barrel since this past week, although the market has been losing more than 6 percent from its mid-March peak of about $115 as some workarounds and ceasefire signaling have taken the sting out of panic pricing.

But the financial news is a secondary news to this week's intelligence news — and it's the intelligence news that hits at the heart of America's strategic misjudgment.

The CIA's unwelcome evaluation

A classified analysis that White House policymakers received this week, first reported by The Washington Post, found something that doesn't fit with the public face of the Trump administration. The US military blockade of Iran's ports would have little impact on the Iranian economy for around another four months. The assessment was not the result of an antagonistic government or a think tank with a political agenda. It was created by America's foreign intelligence unit.

The details are worse. US intelligence satellites have observed the flow of goods and energy across land borders and unofficial channels, suggesting that Iran's neighbors are not necessarily helping the blockade by the Americans. Put another way, there's a secret, but vital, leak in Washington's economic campaign — and it's overland through nations which want to maintain profitability despite neutrality rather than solidarity with America's policy.

The military side is not much brighter. Despite over two months of U.S. and Israeli attacks, Iran still has 70 percent of its missile arsenal in full operational readiness, and 75 percent of its mobile missile launchers are still intact. The damage has been more serious than it has been fatal. Tehran was well into this conflict, and it's not done yet.

As always the administration's intelligence machine reacted. A senior intelligence official gave a public rebuttal of the CIA's conclusions as "false," and argued that the blockade was causing "real, compounding damage" by cutting off trade, harming revenue and "speeding up" systemic economic collapse. The apparent paradox is that this is a blockade that, on one hand, has months to work its way through before it becomes a serious threat to the policy maker, while on the other it is being described as "a fantasy. This type of internal rampage is very seldom revealed to the public — and if it does, it points to a policy problem far deeper than the official one.

A conflict neither side is successfully winning in an orderly fashion

It's hard to make of this conflict the simple story of one side or the other. Since the war began on February 28, Iran has been largely shutting off non-Iranian shipping through the strait and the U.S. has also tightened its own "counter-blockade" against Iranian shipping from April 13, creating a "dual blockade" each country applies while the world economy feels the effects of both sides.

A temporary ceasefire brokered on April 8 by Pakistan was supposed to include a resumption of the strait but Iran began regulating traffic and imposing tolls over $1 million per ship. The ensuing Islamabad Talks on April 11 and 12 failed to reach an agreement. Since then, the strait has seen an increase in conflict, not a decrease.

The highest levels of violence in the conflict have been reported in recent days since the ceasefire began a month ago, when the UAE is again being attacked. After just 48 hours of Trump's announcement of “Project Freedom” – the US Navy convoying of commercial shipping – was halted after Iran escalated. Foreign Minister Abbas Araqchi chided Washington for violating the ceasefire while international efforts are underway to find a solution.

The UAE, where there is significant US military presence, is in the crosshairs. In the war, Iran has hit the Gulf states repeatedly and this would be the latest in its efforts to strike the region, which Abu Dhabi called a "major escalation" that was not restricted to the water.

The business of running.The business of running.

The reality the CIA assessment uncovers -- and the Pentagon's spin cannot change -- is that Iran was ready for this. These are not spontaneous reactions, but pre-stocking of necessary goods and fuel, activation of land-border trade routes, and the partial cooperation of neighboring states in transporting goods. They recommend a country that has been spending years under sanctions to build just this kind of resilience.

On an economic basis, the blockade itself was always designed in an asymmetric manner that is more advantageous to the defenders over time. If there's a serious disruption in the Hormuz, 8-10 million bpd could be lost from the world supply. That removal is not necessarily on Iran — which already faces a wide range of other sanctions that bar most legitimate export markets — it is on the Asian economies that rely on the Gulf crude, and have imported some 20 million barrels per day of crude oil and petroleum products through the strait in 2024.

Almost 90 percent of the oil imports into Japan pass through the Hormuz Strait. South Korea is right on its heels. Both India and China are exposed to substantial exposure. These are not side-economies. These have been the second, fourth, fifth and tenth largest GPD bases in the world; and Washington has been asking them to bear the burden of the disruption, and yet not imposing the blockade against Iran upon them. Secretary of State Rubio's public complaints that allies in Europe, such as Italy, were not cooperating with the US in its pursuit to reopen the strait this past week exemplify that credibility gap.

The worst-case scenario, based on Oxford Economics calculations, is that oil prices could rise to $115 per barrel before eventually dropping down, and that this would push up the inflation rate in the United States to 5.5 percent and in the Eurozone to 3.5 percent. The worst case isn't a theoretical exception; it's more or less the current price since March.

The diplomatic track: not always wide, but never closed.

The maze is a place where there is a negotiated exit somewhere in the maze, but at present nobody has the key. Reuters reported both sides are making last-minute efforts to avoid a resumption of full-scale hostilities and stabilizing the Hormuz shipping route in a one-page memorandum that would formally end the war and provide a 30-day window for talks on a wider agreement. Steve Witkoff and Jared Kushner, both Trump's representatives, are leading the mediation, but the Pakistani government is acting as a crucial facilitator.

But most important, the draft memorandum reportedly does not contain certain past US demands that Iran has already refused — such as restrictions on Iran's missile program and the cessation of Iran's support of the Syrian-backed Hezbollah group and other proxy networks. This is no small concession. It's a drastic change from the maximalist argument Washington had used to justify going to war in the first place.

Iranian Foreign Minister Mohammad Javad Zarif has stated there is a deal only a few steps from completion, and has criticized the US negotiators for putting forward "maximalist demands. However, the Iranian internal politics are not straightforward. The Iranian citizen commentator who was speaking about the negotiations, told the domestic sentiment in a sharp statement: "The nation has spent years under sanctions and pressure, and forfeited the blood like a war, and every day of delay is a day of life or death. There's a population within Iran that has endured two months without Internet, infrastructure attacks, and economic hardship, and they're paying close attention to see if their government's defiance forks a result of their worth.

The significance of the intelligence gap.The meaning of the intelligence gap.

Let go of the press releases and the propaganda on both sides and what you're left with is a war whose outcome is being decided more by the patience and domestic tolerance of the two sides than battlefield success. Washington underestimated the speed of the coercive pressure coming from the blockade. Tehran underestimated the severity of the military punishment it would have to endure before it would need relief.

Exhaustion, economic pain (also unevenly distributed across the world) is driving the negotiation of both sides, with a clear result achieved by neither side on the battlefield. The four-month estimate from the CIA is really a comment on leverage - the US doesn't have the same economic leverage on Tehran that it believed it did when it put the blockade in place. Another four months of toughness in a war that's been ongoing for two months is likely to prove futile for Washington.

The strait will be re-opened in due course. Is it reopens on terms of what actually happened — or on the terms that one side would like to have happened? Experience has shown that this is not often the case.

Sources: The Washington Post's CIA assessment, Federal Reserve Bank of Dallas economic modelling, U.S. Energy Information Administration, Congressional Research Service, Oxford Economics.