Rising US-Iran Tensions in the Strait of Hormuz and the Implications of Trump's 'US Territory' Remark

Executive Summary

Following the expiration of the Islamabad Memorandum on August 17, President Trump defined the Strait of Hormuz as 'US territory' and demanded Iran's unconditional surrender, prompting Iran to shift its policy from a defensive to a 'fully offensive' posture. However, persistent mixed signals—conflicting reports of a dialogue channel led by Special Envoy Kushner and President Trump's public denials—suggest the prevailing view that this remark is rhetorical pressure following the breakdown of talks, rather than a genuine move to exercise sovereignty. For Iran, control over the strait is not a bargaining chip but a form of asymmetric leverage tied to regime survival. Consequently, the blockade and Iran's unilateral transit system are likely to persist. EAI's baseline scenario (50% probability) anticipates alternating periods of negotiation and tension. However, we also recommend preparing for a pessimistic scenario (30% probability) involving the collapse of the Omani mediation channel. South Korean companies should not rush to resume normal shipping routes but should instead gradually reduce their reliance on Iran's transit system and establish a contingency framework that tracks the viability of the Omani channel as an independent risk indicator.

I. Analysis of the Current Situation

Rising US-Iran Tensions in the Strait of Hormuz: Analysis of the Current Situation

1. Background and Developments

The current crisis originated with the US-Israeli airstrikes on Iran on February 28, 2026. Since the start of the conflict, the Strait of Hormuz has been under a de facto blockade [8][10]. Before the war, this shipping lane carried approximately one-fifth of the world's crude oil supply [8][10]. On June 17, President Trump and the Tehran government signed a memorandum of understanding, known as the 'Islamabad Memorandum,' which stipulated an immediate and permanent cessation of military actions on all fronts [6][10].

The memorandum was valid for 60 days. When it expired on August 17, the United States ruled out an extension [9][17]. On that day, President Trump demanded Iran's 'white flag' surrender and simultaneously threatened to 'bomb' Oman, which was discussing a maritime transit system for the strait with Iran [17]. Oman has served as the sole mediation channel between the US and Iran in the Gulf region. The threat was perceived as a statement that undermined the very possibility of resuming negotiations after the memorandum's expiration [9].

Following the memorandum's expiration, Iran shifted its policy posture from defensive to offensive. According to Reuters, a senior Iranian official announced a shift to a 'fully offensive' military posture, citing the stalemate in negotiations with the United States for a permanent end to the war [9]. Negotiations to resume oil tanker traffic also halted around this time [9].

2. Current Situation

On August 21, during a rally in Myrtle Beach, South Carolina, President Trump again defined the Strait of Hormuz as 'US territory.' 'Iran wants to make a deal so badly, but we don't even know if we want to make a deal,' he said [5]. He also warned that Iran must not possess nuclear weapons, stating, 'We stopped them. They will never have a nuclear weapon' [3].

Prior to this, on August 18, he posted a map on Truth Social labeling the Strait of Hormuz as 'NEW US Territory' [13][15]. On the same day, he asserted, 'There are no ongoing or scheduled consultations or dialogues with Iran' [7][11][12]. Regarding the naval blockade, he stated that it 'remains fully in place and is effective' [7]. This statement directly contradicts remarks made a day earlier by Jared Kushner, President Trump's special envoy and son-in-law, who had described 'very positive and active conversations' between the US and Iran [11][12]. This indicates conflicting signals regarding the Iran channel even within the White House.

In a televised interview on August 22 (local time), Mohsen Rezaee, Secretary of Iran's Supreme National Security Council, warned that Iran would 'retaliate in an earthquake-like manner' to any further measures by President Trump [1]. He also pressured Iran's neighbors not to participate in the US economic war, adding the warning, 'Otherwise, we will...' [1]. This statement is interpreted as being aimed at all Gulf oil-producing countries following the UAE's complete suspension of trade with Iran [10].

Qatar has adopted the stance of a mediator awaiting a resolution in the Hormuz negotiations between Iran and Oman. The UAE has remained on high alert since detecting an Iranian missile [18]. Gulf media outlets are characterizing the current phase as a confluence of 'suspended negotiations and a halt to the resumption of tanker operations' following the memorandum's expiration [9].

3. Key Actors and Positions

United States (Trump Administration): President Trump is escalating pressure on Iran by directly asserting sovereignty over the Strait of Hormuz [13][15]. Although initially made in a joking manner at a rally [3], the remark was later repeated and made more concrete with the posting of a map on social media [13]. This, combined with the established policy of targeting low oil prices in its economic war against Iran, suggests an intention to use control of the strait itself as a bargaining chip [6]. Simultaneously, the threat to bomb Oman reveals a self-contradictory pressure tactic, with the US threatening the very mediation channel it needs [9][17].

Iran: Iran has consistently defined the blockade of the strait as a form of asymmetric leverage directly linked to regime survival [4]. Secretary Rezaee's warning of 'earthquake-like' retaliation reaffirms Iran's intention to respond immediately to further US sanctions or military action [1]. The declaration of a shift to a 'fully offensive' posture can be read as a signal of escalation, moving beyond a defensive blockade to include pressure on neighboring countries [9]. In response to President Trump's territorial claim, Iran has retorted that the strait 'will remain Iran's' [13].

Oman: As the mediating country that has been discussing a navigation system for the strait with Iran, Oman's status as a mediator is now being undermined by President Trump's threat to bomb it [9][17]. The local Omani media outlet, Times of Oman, reported Trump's remarks by citing Al Jazeera [3], reflecting a sense of crisis that the country could become a direct victim of the US-Iran conflict.

Gulf Oil-Producing Countries, including Qatar and the UAE: Qatar remains in a standby mediation role, awaiting an Iran-Oman agreement [18]. The UAE has shifted to a high-alert posture, completely halting trade with Iran after detecting an Iranian missile [10][18]. These countries are the targets of Secretary Rezaee's warning against 'joining the US economic war' and are also potential targets of Iran's warning that providing support or facilities to US forces could be considered an act of war [10].

4. Key Issues

First, it is unclear whether President Trump's 'US territory' remark will translate into actual policy action. Although the statement has been repeated at rallies and on social media [3][13], the prevailing view is that it is rhetorical pressure for negotiations rather than a measure with any basis in international law [15]. Second, the clash between Special Envoy Kushner's mention of 'positive conversations' and President Trump's 'no dialogue' statement raises questions about whether the US has a unified approach toward Iran [11][12]. Third, assessments differ on whether the threat to bomb Oman is a credible warning or a tactic intended to derail Iran-Oman negotiations [9][17]. Fourth, as Secretary Rezaee's warning of retaliation remains unspecified, Gulf oil-producing countries face pressure to choose sides between the United States and Iran [1][10].

II. In-Depth Analysis

Rising US-Iran Tensions in the Strait of Hormuz: In-Depth Analysis

1. Analysis of Root Causes

On the surface, this crisis is about President Trump's 'territory' remark, but at its root lies the failure of a six-month military campaign to achieve its goal of forcing the Iranian regime to capitulate [8]. The US military operation against Iran lacks public support at home [8]. President Trump's move to define the Strait of Hormuz as 'US territory' came just after the Islamabad Memorandum expired and negotiation channels had effectively collapsed [9][17]. It can thus be interpreted as a symbolic declaration made in the absence of either a military victory or a diplomatic settlement.

From Iran's perspective, control over the Strait of Hormuz is not a bargaining chip but a form of asymmetric leverage directly tied to regime survival [4]. For Iran, which is militarily inferior to the US in conventional terms, its sole source of negotiating power is the ability to blockade a strait that carries one-fifth of the world's oil supply [4][10]. A statement by an Iranian military spokesperson that 'the US has no choice but to accept Iran's order in the Strait of Hormuz' signifies that Iran has no intention of relinquishing this leverage [4]. Its position of maintaining the blockade absent a US military withdrawal and the lifting of sanctions follows the same logic [4]. Structurally, President Trump's 'territory' remark is therefore bound to be interpreted by Iran not as a negotiating signal, but as an attempt to neutralize this leverage itself.

2. Structural Context

Politically, President Trump is in a position where he cannot separate his domestic political calendar from his Middle East policy. At a rally in Myrtle Beach, he remarked, 'If I lose the election, I will be impeached' [5]. This implies his hardline stance on Iran is as much a domestic political survival strategy as it is a foreign policy one. This structure creates a persistent incentive for the political utility of a hardline message to outweigh the benefits of a negotiated settlement. The fact that President Trump denied any talks, stating 'there are no consultations or dialogues,' just one day after Special Envoy Kushner announced 'very positive and active conversations' were underway, illustrates the mixed signals on the Iran channel even within the White House [11][12].

Economically, increased US energy self-sufficiency has weakened the traditional motivation for protecting the strait [4]. In the past, the US justified deploying military forces for maritime security in the Gulf on the grounds of its own energy security. That economic incentive has now largely disappeared. Nevertheless, a structural dilemma remains, as an oil price shock from a blockade would still create a domestic political burden [4]. The Trump administration's prioritization of low oil prices as a key objective in its economic war against Iran can be seen as an attempt to manage this dilemma [6]. Brent crude, for instance, rose to $94.06 per barrel on August 20 [6].

From a security perspective, Gulf oil-producing countries face a growing risk of entanglement despite not being parties to the conflict. The chief of staff of the Iranian armed forces has warned that any Gulf state providing support or facilities to US forces would be considered to have entered the war [10]. After being hit by an Iranian ballistic missile attack, the UAE suspended all trade, commercial, and financial transactions with Iran [10][18]. Yet, it has also sought to strike a balance rather than completely severing ties, reaffirming its commitment to dialogue and regional integration [10]. Oman has served as the sole mediation channel for discussing a navigation system with Iran, but this role is now being undermined by President Trump's threat to bomb the country [9][14][17]. Many Gulf Cooperation Council (GCC) member states are thus caught in a structure that forces them to choose between the US security umbrella and their geographical proximity to Iran.

3. Historical Precedents and Comparative Cases

This is not the first time President Trump has resorted to asserting sovereignty over foreign territory when faced with a diplomatic impasse [15]. He has a history of escalating pressure with similar territory-related remarks whenever negotiations have stalled [15]. His designation of the Strait of Hormuz as 'US territory' is seen as an extension of this pattern [15]. It is interpreted more as a rhetorical weapon intended to provoke a reaction from his negotiating counterpart than as a claim based on effective control or international law.

The dynamic of blockades and counter-blockades over the Strait of Hormuz is not new. Iran has previously used the possibility of a strait blockade to gain leverage during periods of Western sanctions. What distinguishes the current situation is that, amid an armed conflict lasting over six months, the blockade has shifted from a 'threat' to a 'reality' [8][10]. Since the war began on February 28, the strait has been under a de facto blockade [8][10]. With the gap between threat and execution now closed, the inertia of tension is far greater than in past crises that involved only threats of a blockade.

Another precedent is the Islamabad Memorandum itself. At its signing on June 17, President Trump effectively declared the crisis over, stating, 'Ships of the world, start your engines' [2]. However, the memorandum expired without extension after 60 days, and the situation reverted to a full blockade [9][17]. This has already confirmed a pattern in which temporary fixes fail to resolve the underlying conflict. EAI has previously noted in its analysis that this dynamic could solidify into a high-cost 'new normal' characterized by alternating periods of negotiation and tension [4][6].

4. Key Variables Shaping Future Developments

The first variable is the survival of the Omani mediation channel. Oman is effectively the only channel for discussing a future navigation system with Iran [14]. If President Trump acts on his threat to bomb Oman, or if Oman withdraws from its mediation role, the central pillar of negotiations will collapse [9][17]. The fact that all 11 vessels transiting the strait as of August 11 used Iran's unilateral transit system suggests this system has already become the de facto standard route. However, its legal status is precarious, and the collapse of the Omani channel could lead to an abrupt halt in shipping.

The second variable is the extent of participation by Gulf oil-producing countries in the US-led pressure campaign. Secretary Rezaee's warning to 'Iran's neighbors' not to join the US economic war is an attempt to prevent other countries from following the UAE's lead [1][10]. The degree to which countries like Qatar and Saudi Arabia comply with US requests for sanctions coordination will be a key factor in determining whether the conflict escalates.

The third variable is the US domestic political calendar. President Trump's own stated concern about the risk of impeachment [5] is likely to incentivize a hardening, rather than a softening, of his hardline stance. The more that pressure on Iran is leveraged as a political asset during the election campaign, the weaker the incentive for a negotiated settlement becomes.

The fourth variable is the issue of the Iranian pilots detained in Qatar. While this may appear to be a separate humanitarian matter, it could act as a catalyst for inflaming hardline public opinion in Iran. Coinciding with Secretary Rezaee's 'earthquake-like retaliation' remark, an unexpected local incident related to this issue could serve as a potential flashpoint, escalating into a full-scale military response [1].