The US war on Iran will be remembered as a turning point in the crisis of American imperialism. Seven weeks into a conflict that has killed several thousand Iranians and nearly 2,000 Lebanese, the actual strategic result has been the opposite of what Washington intended. Far from reasserting American dominance over the Persian Gulf, the war has both exposed and deepened the declining ability of the United States to rule the global capitalist system.
The “ceasefire” does not alter that reality. Barely 10 hours after threatening that “a whole civilization will die tonight,” Donald Trump announced a two-week suspension of the bombing, conditional on the “complete, immediate, and safe opening” of the Strait of Hormuz. Within a day, the supposed truce had unraveled: Israel, which Netanyahu’s office declared was not bound by the agreement in Lebanon, launched a devastating wave of strikes, killing over 300 people in a single day. Iran responded by re-halting Hormuz traffic. Now, 21 hours of face-to-face negotiations in Islamabad have collapsed without an agreement.
Despite more than 13,000 targets struck and an estimated $28 to $45 billion in direct US military expenditure—with broader economic costs running far higher—even the most limited operational aims of the US-Israeli campaign remain unachieved. According to Reuters, US intelligence can confirm the destruction of only about one-third of Iran’s vast missile arsenal. Analysts assess it retains thousands of ballistic missiles. Meanwhile, regime change has not materialized despite the assassination of dozens of leaders, and American control over Iran’s oil is nowhere in sight.
Iran has carried out the long anticipated move of shutting down the Strait of Hormuz and, in doing so, has discovered the extent of its power over this vital choke point of global energy, through which roughly a fifth of the world’s oil and gas flows, as well as other critical commodities, such as fertilizers, helium and petrochemical products.
The ceasefire has done little to nothing to restore normal passage. Instead, states and shipping companies have been forced to negotiate directly with Iran for permission to move vessels through the strait, while Tehran has sought to retain leverage through inspections, delays and fees. Reports from Bloomberg and the Financial Times indicate that some of these payments have been made in yuan and cryptocurrency.
Rather than reopening Hormuz on American terms, the war has left Iran in a position to regulate access to the world’s most important energy corridor. Trump’s most recent move—to blockade the strait entirely, ensuring that not even Iranian vessels can traverse it—reflects desperation: If the United States cannot control it, it will drag Iran, and the whole world economy, down with it.
An essential aspect of Trump’s contradictory messages throughout the war—threatening to obliterate Iranian civilization one moment and calling a ceasefire the next—is that he is disturbed by the lack of success of the operation and the reaction of global markets to it. He is fumbling for ideas as he buys time. The spot price for physical oil cargoes has effectively doubled since the war began. US gasoline has crossed $4 a gallon for the first time since 2022. Stock markets have posted their worst quarter since 2022.
There is a panic in the ruling class that this war will yield a win for Iran, prompting Democrats, such as Pete Buttigieg on CNBC last Friday morning, to suggest a further escalation of the war to achieve regime change.
A world historic energy crisis
Within the oil and gas industry, the prevailing view is that markets and governments—worried as they may be—still do not understand the dimensions of the crisis now unfolding. As Bloomberg reported last week, after speaking with more than three dozen traders, executives and shippers, “The world still hasn’t grasped the severity of the situation.”
Fatih Birol, head of the International Energy Agency (IEA), told the French Le Figaro that the crisis was “more serious than the ones in 1973, 1979 and 2022 together.” “April will be much worse than March,” he warned, because the ships that passed through Hormuz before the war are only now reaching their destinations. “In April, there is nothing.”
Because oil tankers move slowly—around 10 to 15 knots, given their size—the last shipments that made it out of the Gulf at the end of February are only now arriving at their nearest destinations, primarily in Asia. The actual crisis in the physical supply of oil, gas and the other commodities that flow from the Gulf—fertilizer, petrochemicals, sulfur, helium—is only just beginning to be felt. It may take until May for its full force to arrive. Meanwhile, for every new day of a blocked Strait, the crisis deepens.
This disconnect between the financial and physical markets for oil was also noted by the New York Times Friday morning in an article, “The Oil Shock Is Worse Than You Think,” showing massive 50 percent premiums (on top of the financial spot price) buyers are paying to get their hands on an actual barrel of oil.
While the strategic reserves released by the IEA help, they amount to less than they first appear. At current global consumption, they, in total, cover roughly four days of world demand, or about 20 days of normal Hormuz flows. Nearly half the release comes from the Americas, far from the Asian markets that need it most, and the US reserve can flow at only about four million barrels a day, taking weeks to reach markets after authorization. As analysts at Macquarie Capital put it, “If that doesn’t sound like much, it isn’t.”
Even after all countermeasures are taken into account—strategic releases, pipeline diversions, production shifts—the net shortfall in global oil markets still amounts to about 13 million barrels a day of oil. That is roughly 13 percent of the world’s energy supply missing.
The crunch may be more acutely felt in liquefied natural gas and refined petrochemical products. Unlike oil, there are no strategic LNG reserves and no alternative pipeline routes out of the Gulf. The tankers that carry it—vast, complex vessels worth hundreds of millions of dollars apiece—are especially unwilling to transit the strait without guaranteed safe passage. Nor is there any way to reroute Qatari gas overland.
Geographically, 85 percent of the fossil fuels flowing out of the Gulf are bound for Asia. It is there that the devastation will be most acute, especially in poorer importing countries like the Philippines, Cambodia and Thailand.
Meanwhile, the Trump administration continues to display an astonishing ignorance of the basic mechanisms of energy markets. “Energy prices are going down … you don’t have to believe me, look at the futures market,” Kevin Hassett, the White House’s top economic adviser, told Fox News. But under the present conditions, a declining futures curve—backwardation, as it is known—is evidence of panic. Near-term barrels are trading at a massive premium to later deliveries because buyers are desperate to secure physical supply.
On April 2, the physical “dated” price for actual Brent crude cargoes—oil scheduled for delivery within the next 10 to 30 days—hit $141 a barrel, according to S&P Global. That was the highest level since the 2008 financial crisis. The same day, the June futures contract closed at $109. That $32 gap between paper and physical prices is extraordinary. In the days since, the gap has climbed to almost $50, albeit continuing to fluctuate.
Amrita Sen, founder of Energy Aspects, told CNBC the futures market is “almost giving a false sense of security,” masking the true tightness in the physical oil market. European diesel, a fuel critical to global transport, has meanwhile risen to nearly $200 a barrel.
Long-term impact
Even if new negotiations were somehow to produce a full and lasting resolution of the conflict, a truly wishful scenario, the damage already inflicted would continue to reverberate throughout the global economy for years.
According to Rystad Energy, war-related damage to LNG trains, refineries, fuel terminals and gas-to-liquids facilities across the Gulf has already generated a repair bill of at least $25 billion—and rising. The single worst case is Qatar’s Ras Laffan, the world’s largest LNG export complex, where missile strikes destroyed two LNG trains, cutting 17 percent of export capacity. QatarEnergy has declared force majeure. Full recovery could take up to five years, because the giant turbines that must be replaced are manufactured by only a handful of firms, all of which entered 2026 with years-long backlogs.
Martin Kelly, chief analyst at EOS Risk, told the Financial Times that there was “no way” the backlog of 900 or more ships waiting to exit the Gulf could be cleared within two weeks. He suggested that only 10 to 15 ships a day might be able to pass through the strait, compared with roughly 135 before the war.
Meanwhile, Saudi Arabia’s key East-West pipeline—which has played a vital role in offsetting part of the wartime supply loss—was attacked last Wednesday. Though not permanently damaged, the incident reflects the fact that new strikes and disruptions could occur at any time.
Iran has discovered significant power in all of this.
A country being bombed and strangled is simultaneously operating as the gatekeeper of the world’s most important energy corridor. Trump, meanwhile, appears to have few cards left to play except to make good on his Hitlerian threats to turn Iran into the next Gaza—to starve and endanger millions through the systematic destruction of power plants, water systems and energy infrastructure.
The destruction of Iran’s civilian infrastructure would inflame opposition to American imperialism across the globe. It would mean the deaths of tens of thousands, directly and indirectly. It would constitute a barbaric assault on one of the world’s oldest civilizations: a country of more than 90 million people.
Yet what other path forward does Trump see?
Iran possesses vast, high-quality oil and gas reserves—the world’s fourth-largest proven oil reserves and second-largest proven gas reserves—both still only partially developed. It is, in that sense, a potential treasure trove for American imperialism and its allies. Much of this oil, and much other Gulf oil besides, flows eastward to China and Asia. And control over the Strait of Hormuz means control not just over Iran’s oil, but this entire flow. Yet outside of a sustained, massive ground invasion, it is far from clear how the United States could seize and hold the strait, let alone the oil and gas fields themselves.
Iran does not need a functioning power grid to threaten the Strait of Hormuz. So long as it can send out even a handful of speedboats, the chokepoint can become effectively impassable for commercial shipping. No insurer will cover tankers and cargoes worth hundreds of millions of dollars if there is a chance they will be struck.
What does this war reveal about the state of American imperialism?
The most basic answer is that the United States, in attempting to reassert control over the world’s most important energy region, is instead pulling the rug out from under both the global economy and itself. A sustained energy shock of this magnitude will ripple outward—through fertilizer and food costs, through global transportation and manufacturing, through semiconductor supply chains dependent on Gulf helium exports. The conditions for a severe worldwide recession are being created—a recession that could have even more profound impacts than the oil crises of the 1970s.
Everywhere, this war is opposed. Two-thirds of Americans tell pollsters they want it ended quickly, even if that means abandoning the administration’s stated goals. Large majorities oppose the deployment of ground troops—and yet the White House has refused to rule it out, with Press Secretary Karoline Leavitt saying Trump “keeps his options on the table.” In late March, the Selective Service System submitted a proposal to begin automatically registering all eligible men for a potential draft by December.
The Trump administration’s response has been to make Americans pay for it. On April 2, at a private Easter luncheon, Trump told guests it was “not possible for us to take care of daycare, Medicaid, Medicare—all these individual things. We have to take care of one thing: military protection.” The next day, the White House released the largest defense budget in U.S. history — $1.5 trillion, a 44 percent increase — while proposing $73 billion in cuts to education, health, housing, and domestic programs.
The war is also deepening divisions within the US-led imperial order. Trump has told allies to “learn how to fight for yourself” and to “go get your own oil.” He has threatened to withdraw funding from Ukraine if European states refuse to participate in the conflict. European leaders remain, for the most part, complicit lapdogs, but it would be a mistake to underestimate the resentments building within the European ruling class as it increasingly bears the consequences of American policy.
The crisis is accelerating European rearmament and giving new substance to long dormant ambitions for an independent European great-power politics—with disastrous implications for the European working class.
China
The clearest beneficiary in all this is the Chinese state. While developed-market sovereign bonds have sold off sharply, Chinese government bonds have begun to function as a global safe haven, with foreign yuan bond issuance tripling year on year in March to record levels.
As the WSWS has emphasized, oil and natural gas imports are regarded as one of China’s central geopolitical vulnerabilities. Yet Beijing, understanding its vulnerability, has spent years building the largest strategic petroleum reserve in world history—an estimated 1.2 billion barrels—which will provide significant insulation from the shock, both for itself and, potentially, its neighbors.
As John Calabrese of American University writes, “As America fights, Asia turns to Beijing.” This can, for example, be seen in the Philippines, where the crisis is strengthening pro-China sections of the ruling elite.
The irony is bitter, because the strategic logic of the war was precisely to help repair the US’s declining hegemonic status and prepare for war with China. It should be noted that a key bombing target for the US and Israel has been Iran’s railway system, whose most important connection is to China.
But instead of strengthening Washington’s hand, the war has accelerated the conditions eroding American imperial power.
It is precisely for this reason that the Democratic political establishment is tactically opposed to Trump’s foreign policy—not because of the illegal murder of thousands of Iranian civilians, which they would be willing enough to carry out themselves given enough spin; not because they reject the drive to subordinate Iran to American interests; but because they recognize in Trump’s approach a tactical blunder that ruins their game.
The administration has charged at this problem with the intelligence of a bull, surrounded by an ultra-Christian nationalist echo chamber of fascists better suited to an asylum than to public office.
But Trump’s disastrous decisions do not make him, or American imperialism, less dangerous—They make the situation more dangerous. Here, the effort by the left flank of the Democrats, i.e., the DSA, to dismiss Trump’s threats to destroy Iranian civilization as mere “bluster” works to disarm opposition at a crucial moment when working class opposition to war must grow.
The war is not some bad policy slip or an isolated blotch. It is the culmination of decades of American policy aimed at dominating Persian Gulf energy—a strategic, bipartisan drive stretching from the 1953 CIA coup against Mossadegh, through the loss of Iran in 1979, to the invasion of Iraq and the destruction of Libya.
But simultaneously, it is one front in a broader strategic offensive that includes the NATO confrontation with Russia over Ukraine, the genocide of the Palestinian people, and most crucially, escalating economic and military pressure targeting Beijing. In the words of a UPS worker interviewed in January, “World War 3 is brewing.” At the heart of this drive is the effort by the United States and its allies to use violence to stave off their accelerating economic and political decline.
With Trump, and this debacle, what is new is not the objective but the desperation, and thus confusion, with which it is being carried out.
Shakespeare had fitting words for this. In Henry VI, the future Richard III, lost in scheming ambition, declares:
I,—like one lost in a thorny wood,
That rends the thorns and is rent with the thorns,
Seeking a way and straying from the way;
Not knowing how to find the open air,
But toiling desperately to find it out,—
Torment myself to catch the English crown:
And from that torment I will free myself,
Or hew my way out with a bloody axe.
Indeed, the only way forward for Trump in this situation is to “hew” his way out “with a bloody axe.”
And this is not a personal or psychological issue. Trump’s madness is the historic madness of American imperialism in decline.
The only real advantage the US retains in fending off its economic decline and the disintegration of the postwar order is its unhinged military prowess. But as the war on Iran is demonstrating, this might no longer translates to power.
This war will not restore American dominance. The emerging energy crisis will have catastrophic and far-reaching consequences, threatening above all those countries—the United States foremost among them—mired in debt and fictitious wealth.
The war will accelerate the political, economic and social processes driving the implosion of US imperialism, ushering in an era marked not by Chinese supremacy but by a fracturing political and economic order, the constant threat of war and crimes against humanity, and, with all this, profound revolutionary consequences for the working class everywhere.
But those consequences will not find progressive expression on their own.
“It is not enough to be appalled,” stated David North in response to Trump’s April 1 speech.
Horror, left to itself, exhausts itself in impotent frustration or isolated episodes of individual resistance. What is required is the development of a mass working class socialist movement, which is guided by an internationalist socialist program, infused with genuine revolutionary morality, and opposed in every respect to the depravity of the ruling class.
We call on all workers and young people who oppose the imperialist onslaught in Iran to join the call of the Socialist Equality Party and get involved in the fight for socialism and the end to capitalist barbarity.