On the night of September 1, tensions between the U.S. and Iran escalated again: U.S. stocks, U.S. Treasuries, and gold fell; the U.S. dollar rose; and international oil prices surged by over 5%. How should we interpret this?

The Strait of Hormuz has remained open for maritime traffic; the U.S. military has cleared naval mines from the shipping lanes and is providing a certain level of protection. Trump’s claim about the volume of maritime traffic is exaggerated, and Iran’s statements are equally unreliable—we should refer instead to figures reported by China Central Television (CCTV). According to data released by the vessel-tracking firm Kpler on September 1 local time, approximately five vessels transited the Strait of Hormuz on August 31—roughly unchanged from the previous weekend but significantly below the 10-day average of about 14 vessels. The U.S. military had warned Iran that any small boats attempting to lay mines would be destroyed. In response, the Islamic Revolutionary Guard Corps (IRGC) devised an alternative plan: launching mines remotely into the shipping lanes. However, before they could even begin operations, U.S. aircraft struck their positions and launch facilities, destroying both personnel and equipment. Frustrated, the IRGC declared: “Can’t we even act within our own territory?” It then launched retaliatory strikes against U.S. military bases in the region and attacked commercial vessels in the Strait of Hormuz. In the night of August 31 to early morning of September 1, 2026, the Liberian-flagged oil tanker 'Senegal Prosperity' was struck by three unidentified artillery shells while navigating the Strait of Hormuz, resulting in a communications blackout—but with all crew members safe and no environmental contamination. Attacking commercial vessels and inflicting casualties on U.S. forces constitute red lines. Iran has crossed both—twice—in quick succession, triggering large-scale U.S. military retaliation. Consequently, the Strait of Hormuz has once again become unsafe. Given Iran’s repeated targeting of merchant ships, daily transit volumes—previously around a dozen vessels—have plummeted sharply and may soon drop to zero.

Will the U.S. and Iran reach a negotiated settlement in September–October?

Iranian Foreign Minister Araghchi is scheduled to depart New York for Tehran on Tuesday, September 29 (U.S. Eastern Time). If no agreement is reached before his departure, negotiations are effectively doomed. As the saying goes: 'A general on the battlefield may disregard imperial orders.' Araghchi arrived in New York bearing provisional authorization from Tehran’s pro-engagement faction—granting him substantial autonomy in negotiations and latitude to make concessions. However, once he returns to Tehran, this temporary 'golden mandate' will be revoked and authority will revert to 'Little Khamenei'—i.e., the hardline, pro-war faction within the Revolutionary Guard. Thus, the current window represents the final opportunity to rapidly finalize a new framework agreement, leveraging his temporary highest-level negotiating authority. Otherwise, talks will regress to the sluggish, inefficient model reliant on intermediaries—such as Qatar or Pakistan—to shuttle messages back and forth, with neither side truly understanding the other. Moreover, the pressure exerted by the upcoming U.S. midterm elections constitutes a monotonically decreasing function whose domain ends on November 3—the election date. The 'time value' (Theta) of this electoral-pressure 'option' expires—and drops to zero—at the moment the midterm elections conclude.

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Iran Escalation Makes More Sense After Midterms, Hochstein Says

Iran Escalation Makes More Sense After Midterms, Hochstein Says

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