An informal system of “permits-for-passage” through the Straits of Hormuz is emerging after Tehran has started to grant navigation permission to oil tankers headed to “friendly countries" with cargos of oil and gas.

A tanker loaded with crude bound for India was given permission to traverse the Straits yesterday, after New Delhi lobbied Tehran to allow the tanker to pass. While the bulk of the traffic has been halted since the IRGC closed down the Straits on March the 2nd, as bne IntelliNews reported, a trickle of ships is getting through. In addition the Wall Street Journal reported that Iran’s shadow fleet of tankers is still sailing and Iran exported more oil via the Straits than it did pre-war in the last ten days.

If one of the, as yet unstated, war goals of the Trump administration was to take complete control of the Straits of Hormuz then that mission has comprehensively failed. Special Envoy Steve Witkoff was reportedly demanding this from Tehran in the last round of diplomacy in Geneva: he wanted Iran to disband its navy completely and give up control. Obviously, Tehran refused. The bombs began flying the next morning.

The US is headed towards a strategic defeat in the Iranian war. Trump has made a long list of big mistakes.

Asymmetric war: The first mistake is the US has made to fall into the Churchillian trap of: “generals always fight the last war.” Trump has assumed that the overwhelming power of the US navy means he can repeat the “tanker war” of Iran-Iraq war in the 1980s when US warships escorted pairs of Kuwaiti tankers through the Straits and kept oil flowing.

The Wall Street Journal reports that the navy has been getting daily requests from shipping companies to give them safe passage from the start. And it's been refusing those requests on a daily basis because it's “too dangerous to traverse.” Trump is right that the US navy has overwhelming firepower, but that doesn’t matter. It only works if you are standing in front of their guns. With its swarms of drones hidden in caves and buried in holes and a fleet of mini-bubmarines, any ship that comes into range of the shore in the Straits is a sitting duck. At least one tanker was blown up yesterday by an unmanned Iranian submarine. As always, America has overestimated its own military power and underestimated the ability of its adversaries to adapt.

The US is still using its standard “shock and awe” tactic of attacking with overwhelming force, seeking a fast knock-out blow. Iran is countering with Ukrainian tactics, thrashed out by four years of brutal fighting, that have shown that a weaker adversary can tie up a much more powerful adversary indefinitely.

We have already reported on Iran’s massive advantage in the cost-to-kill ratio nature of this war. Pointedly, the American flag ship, USS Gerald Ford, is not in the Gulf but parked off Haifa. It is simply too expensive to be used. A multi-billion-dollar warship can be disabled by a drone costing a few tens of thousands of dollars. Iran has already driven America’s king into the corner of the board in a stalemate where it can’t move without being checked. America’s overwhelming advantage in firepower has been negated.

The decisive change in the balance of power came in the first week of war, when the IRGC triggered its Decentralized Mosaic Defence doctrine (DMD), which has been years in preparation. The IRGC forces have been broken into 31 autonomous units are disbursed and will continue to fight even after the central command has been assassinated.

Decapitation: Another mistake was to assume the Islamic Republic would fall if it was decapitated. Decapitation worked beautifully in Venezuela at the start of this year. It has also previously worked in Libya, Syria and Iraq, where the leaders were killed or fled leading to the downfall of their regimes. While Supreme Leader Ayatollah Ali Khamenei was killed along with a lot of his family in the first days of Operation Epic Fury, decapitation won’t work in Iran as the political and culture of the Persians is entirely different – a fact that seems to have been lost on Trump, who famously never reads his briefings if they are more than a page long.

Suffice to say that the Ayatollah has already been replaced by his son (who is yet to say anything at all) and reports this morning say that the elite remains firmly in charge.

Regime change: Another mistake was Trump was clearly assuming the attack would destabilise the government to the point where the mass demonstrations would restart and topple the theocracy. That is clearly not going to happen now.

Our Tehran bureau is reporting that while the theocracy remains highly unpopular, the idea of letting the US take over control of the country is also not popular in the classic “rally to the flag” phenomena. There is little propensity to restart the demonstrations and simply going onto the streets is now extremely dangerous as you may be killed by either the IRGC or a US-Israeli bomb. After his initial video address where he promised Iranians a “once in a generation” opportunity to take control of their own country, the trope of regime change has been quietly dropped.

In this sense, Trump has made the same mistake as Putin in Ukraine, who assumed the invading Russian forces would be greeted with flowers and cheers as liberators.

Sanctions in reverse: If Iran retains control of the Straits and if this permits-for-passage system persists then that will radically change the nature of the energy markets. US navy power previously guaranteed the right of innocent passage through the straits for anyone that wanted to use it. Now you have to get permission from the IRGC. That is in effect oil sanctions in reverse.

Tehran could end up in control of the flow of a fifth of the world’s oil and gas. So far, it is only sold to “friendly countries" overwhelmingly in Asia. As a net energy exporter, the US can survive that, but other allies like Europe will not.

Lessons learned: Iran has clearly learned a lot from last summer's 12-day war with Israel. It surprised observers in that war with the power of its missiles that were able to penetrate the famous Iron Dome, but it is already clear in this war that those weapons have had a major upgrade.

There's footage on social media today showing how the US base was targeted and managed to avoid the THAAD air defences – including Patriot interceptors –  to hit their targets and cause complete chaos. Another report says that the US were unable to evacuate one of their bases because of the intensity of the inbound fire. The Pentagon has already admitted that they underestimated the effectiveness of both missiles and drones.

Another change is that last year Israel was able to flummox inbound missiles by jamming the GPS tracking. This year Iran has changed entirely over to China's BeiDou satellite navigation system that has both improved accuracy of the missiles and made them much more difficult to attack using countermeasures. At the same time, China is reportedly providing Iran with high quality satellite intelligence that has allowed Iran to destroy four out of America's eight irreplaceable THAAD radar systems – a major success. The surviving four THAAD stations in Asia are already being dismantled to be shipped to Middle East.

There are various reports in the press that Russia is helping Iran with satellite intelligence and military supplies without any evidence, but the Chinese help is there in broad daylight. An IRGC spokesman claimed yesterday that Iran has the Russian-made Poseidon torpedo (although he didn’t name it) that Russian President Vladimir Putin claimed is “unstoppable”. The US has nothing to counter this new ordinance and if it is true, the US navy is not only checkmated, but in mortal peril. Iran led on drone technology for years, but signed a technology transfer deal with Russia last year, which built its own drone factories in the Alabuga Special Economic Zone and improved them. There are no reports of that technology flowing back the other way, but the Iranian drones show a remarkable increase in performance in the last year. Russia is also very strong on anti-drone electronic countermeasures.

Beijing and Moscow have been criticized for failing to come to Iran's aid and I won’t go into that here, but they are clearly providing some of the same sort of asymmetric support to Iran as the US is to Ukraine. Both want to see what they see as the US imperialistic campaign in Iran fail, but also need to avoid a direct confrontation with Washington. This is how geopolitics is done these days in the new transactional world order Trump himself is promoting. The old days of the binary “us” and “them” alliances are over.

Underinvestment: Another very bad US mistake was to underinvest into expanding munitions production. As bne IntelliNews has been reporting since the start of the Ukraine conflict, Western governments have failed to sign the defence sector procurement contracts needed for privately-owned arms-makers to make the investments needed to ramp up production, despite the outbreak of the biggest classic set piece war in Europe since WWII.

As everyone starts to run out of interceptor ammo after only one week of fighting, this shortfall is already making itself apparent. Trump called in the CEOs of the biggest arms manufacturers at the weekend and shouted at them to “do some overtime.” But the businesspeople politely said that it would be at least a year before any increases in production arrive.

This is a stunning miscalculation and again underscores the failure to appreciate the nature of a modern drone-based war and the inertia of the old way of thinking. Trump was demanding more Patriot system PAC-3 interceptor missiles and the like. He should have been asking for cheap “good enough” drones in their millions – a capacity no one in Nato has. The point is even if Trump gets his production increases, Iran (or whoever) can easily counter by ramping up their drone production by the same multiple, but at a fraction of the cost.

Ukrainian President Volodymyr Zelenskiy offered Trump a $50bn deal to sell the Pentagon Ukrainian drone technology last year and was refused. He said yesterday that the phone is ringing off the hook now. But it's already far too late for Ukraine’s cutting-edge drone tech to make any difference in this war. Iran has been investing and stockpiling drones since missile restrictions were removed from the JCPOA deal over a decade ago, signed with the Obama administration.

Deadline: Probably the biggest strategic mistake Trump has made is he has a hard deadline to get this war over quickly. With midterm elections in November, he needs a victory in the four weeks he has called for. If he goes into those elections having started a major new war that sends the price of gas at the pump to $5, his would-be reputation as a peacemaker deserving of a Nobel Peace Prize will be shredded and the Republicans will decimate in the polls.

The IRGC is under no time pressure at all and are quite happy to fight an indefinite war. Indeed, it has already been in a low-watt conflict with the US since 1979. All the IRGC has to do in the next two months is simply not stand in front of US guns and rain down missiles and drones on everyone in the region.

It seems that the White House already can read the writing on the wall. There are reports that Special Envoy Steve Witkoff has made at least two approaches to Tehran via intermediaries to sound out the possibility of starting ceasefire talks. Tehran spat in his face.

As bne IntelliNews reported, Witkoff successfully negotiated a de-nuclearisation deal with Iranian Foreign Minister Abbas Araghchi in Genevra on the day before Operation Epic Fury was launched.

“A deal was within each. We left Geneva with the understanding that we’d seal a deal next time we meet,” Araghchi said in a social media post. “But it was Mr. Trump, yet again, who ultimately ordered the bombing of the negotiating table.”

Araghchi ruled out any talks this week and an IRGC spokesman said the world should brace for $200 oil unless Israel ceases to exist. The US overt support for Israel is also undermining support for the US amongst the Arab states, who also don’t like Israel. The entire region is being destabilised as a result of these tensions. There are even tensions between Washington and Tel Aviv, after Israel massively bombed one of the Gulf state’s oil production facilities. The US has had similar problems with Kyiv after the Armed Forces of Ukraine (AFU) started to target Russian refineries last year.

The White House didn’t have a good reputation before, but now it has proved itself to be entirely untrustworthy and insincere it has zero credibility in any talks. That bodes ill for a fast resolution to this conflict as at this point Tehran, and even the moderates in the regime like Araghchi, simply want to inflict as much damage on the US as possible.

The parallels with Putin's conflict with Nato are noteworthy. Not only has the White House miscalculated the reception by the people of its attack, Nato has many of the same problems in the Ukraine war, starting with the lack of ammunition.

Putin believes time is on his side thanks to Ukraine’s growing shortages of everything and so he is spinning out the ceasefire talks. (There are reports that a trilateral US-Ukraine-Russia meeting might happen next week, so the talks are not dead yet.) Europe and Ukraine are running out of money, men and munitions fast. The longer the Ukraine conflict goes on the more pressure there is on Brussels and Kyiv to cave into the Kremlin’s demands and do a deal. Tehran has exactly the same playbook.

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