On Sept. 10, Israel destroyed Hezbollah’s underground command center and weapons stores beneath the Ali al-Tahir ridge in southern Lebanon, about 10 miles from the Lebanon-Israel border. The loss deprived Hezbollah of a fortified position and dealt another blow to Iran’s most important regional ally, which has lost senior commanders and much of its arsenal over the past two years.

Farther south, another part of Iran’s regional network was gaining ground. In Yemen, the Houthis seized territory along the Red Sea coast, bringing them closer to controlling the approaches to Bab al-Mandab, the passage connecting the Red Sea to the Gulf of Aden.

The fall of Bashar al-Assad in Syria in 2024 and Hezbollah’s weakening have diminished Tehran’s influence in the Levant. Yet the wider war has created opportunities for Iran and its partners, particularly around the waterways indispensable for trade and energy exports. Thus, Tehran is losing influence in one arena while acquiring new sources of leverage in another.

Iran’s efforts to control passage through the Strait of Hormuz are only one part of the picture. The Houthis’ expanding reach in the Red Sea gives Tehran’s partners leverage over a strategic waterway, while Iran-aligned armed groups in Iraq can threaten oil pipelines built to bypass these maritime chokepoints.

For Iran’s neighbors, even the routes meant to provide an escape from one danger are exposed to another. Tehran remains under enormous military and economic pressure, but its setbacks in its traditional centers of influence have not ended its ability to impose costs elsewhere. From the Mediterranean to the Red Sea In 2024, Yahya Rahim Safavi, a senior adviser to Iran’s then Supreme Leader Ali Khamenei, was at a conference of Iran-Iraq War veterans that was broadcast live on state television.

He spoke of Iran’s growing reach through Syria and Lebanon. Iran’s “strategic depth” had stretched to the Mediterranean coast and just to the north of Israel, he declared. Hezbollah’s arsenal and the supply corridor through Syria were central to Iran’s “forward defense,” a strategy intended to deter adversaries and keep conflicts away from Iranian territory.

The foundations of that strategy have since been severely weakened. Assad’s removal cost Tehran one of its few state allies and disrupted its ability to resupply Hezbollah, while Israeli operations diminished the group’s capacity to retaliate on Iran’s behalf. Subsequent attacks on Iran itself by Israel and the United States demonstrated the consequences: its regional partners could no longer be counted on to prevent a direct war.

But Iran has been adapting. Even while fighting its own direct war with the U.S., Tehran has worked to develop other sources of regional leverage. On Jun. 8, Esmail Ghaani, commander of the Quds Force, the overseas operations arm of the Islamic Revolutionary Guard Corps (IRGC) announced a “new security belt” extending from the Strait of Hormuz to Bab al-Mandab and from “the Persian Gulf to the Red Sea.”His statement pointed to a growing emphasis on the ability of Iran and its partners to threaten maritime transit across both waterways.

The Houthis’ capture of Mokha, a port city on the Red Sea coast, and Perim Island, which lies within Bab al-Mandab, gives them a stronger foothold at the southern entrance to the Red Sea. These positions could allow them to monitor passing vessels more closely and deploy weapons near the shipping lanes.

They do not need to halt all traffic to exert influence over the passage. Although the Houthis claim they are targeting only Saudi-linked vessels, the threat of attack alone has driven up insurance costs and forced shipping companies to choose longer routes.

The Houthis have their own agenda and should not be treated as an Iranian proxy acting on Tehran’s instructions. Their domestic motivations remain important: their campaign against rival Yemeni factions aims to consolidate their dominance and attacks on Saudi Arabia seek to force Riyadh to reduce its involvement in Yemen, lift what the Houthis consider a “siege,” and recognize them as the country’s ruling power.

Still, the ties between the Houthis and Tehran have deepened since Oct. 2023, and Iranian support has been central to the development of Houthi military capabilities. Some reports suggest Tehran has sent IRGC commanders, military advisers, and missile and drone equipment to Yemen to strengthen the Houthis’ ability to threaten Red Sea shipping.

Overall, the Houthis increasingly see the U.S.-Israeli war with Iran as a threat to the wider “Axis of Resistance” to which they belong; this translates into a close strategic relationship, even though Tehran may not direct every Houthi operation. As the Houthis see it, supporting Tehran serves both Iran’s and their own interests.

These interests are reinforcing one another. Iran’s disruption of Hormuz has increased the strategic importance of Red Sea export routes, giving the Houthis greater leverage over Saudi Arabia and forcing the kingdom to shift exports back to Hormuz, where—despite a recent significant uptick in traffic—passage remains uncertain. From Iran’s perspective, the goal of pressuring Saudi oil exports is to raise the costs of war for Washington and the global economy, giving President Donald Trump another reason to think twice before escalating the campaign.

Between Hormuz and Bab al-Mandeb For Saudi Arabia, the interaction between Hormuz and Bab-al-Mandab fronts creates a vulnerability. While it is true that “shuttle runs” through the strait have helped Gulf oil exporters get their goods out and eased market pressure, shipments remain at risk of Iranian disruption.

As with the Houthis and Bab al-Mandab, Tehran need not close the strait entirely: intermittent attacks can sustain uncertainty and raise shipping costs. Given Houthi advances in Yemen, diverting exports to Red Sea ports is not necessarily a safer option. Riyadh can shift between routes but cannot entirely evade the risk of disruption.

The vulnerability extends inland. A recent drone attack launched from Iraq damaged three pumping stations on Saudi Arabia’s East-West Pipeline and forced a shutdown. Although the pipeline has resumed partial operations, the message was clear: attacks on this alternative route cannot be ruled out.

Among some Iranian strategists, the attack was also interpreted as a broader warning against building pipeline routes to carry Iraqi oil toward Europe through Turkey and Syria: diverting oil away from the straits would not necessarily put it beyond the reach of Iran and its partners.

The attack was widely attributed to an Iran-backed militia, even though the Islamic Resistance in Iraq—an umbrella grouping of Iran-aligned factions—denied involvement. Since the war began in February, the IRGC reportedly has mobilized smaller cells of Iraqi Shiite fighters operating under its command, giving Tehran a more direct role in operations from Iraqi territory.

There may well not be a unified chain of command across the Iranian, Yemeni, and Iraqi fronts, yet attacks from Iraqi territory must be seen as part of a broader campaign, adding to both Houthi pressure in the Red Sea and Iranian disruption in Hormuz. The cost to Baghdad is high, as it is unable to prevent armed factions from launching attacks that expose Iraq to retaliation and undermine its relations with Gulf neighbors. The resulting tensions could also serve Tehran’s interest in limiting its Gulf rivals’ influence in Iraq.

Together, these developments help explain Tehran’s defiant posture, as it feels it can threaten Saudi exports in numerous ways and thereby heighten the economic costs of the war for the United States and its partners.

This has strengthened the argument within the Iranian leadership that they should hold firm and, with time, improve their bargaining position in potential negotiations with Washington. The problem with this argument is that mounting costs for its adversaries do not necessarily mean Iran can afford a prolonged confrontation.

The costs of waiting Trump’s campaign has so far failed to force Iran to accept American terms, while giving Tehran and its partners new opportunities to threaten the global economy. The longer the confrontation continues, the greater the likelihood that Tehran will respond by deepening military coordination with its non-state partners and escalating attacks, directly or through them. In this sense, Washington should have an interest in reaching a settlement before such cooperation becomes more entrenched and the confrontation spreads further.

But Tehran risks drawing the wrong conclusion from this dynamic. Recent developments may encourage Iranian leaders to demand more and offer less, believing that mounting economic costs will eventually force Trump to retreat. But such a scenario is far from being inevitable. Washington might instead respond with further attacks or tighter enforcement of the blockade. Each side would then treat the other’s refusal to concede as reason to intensify pressure, prolonging an uneasy standoff while making an agreement even more difficult.

Iran would be wrong to assume that time will improve its position. Its economy continues to bear the costs of the blockade, and disrupting its neighbors’ exports does nothing to finance its own recovery. Saudi Arabia will resist any arrangement that leaves its access to global markets dependent on Iranian and Houthi restraint. If Riyadh concludes that a negotiated deal would formalize that dependence, it could shift toward more open support for American military and economic pressure on Iran.

Saudi resistance to a planned Oman meeting among Iranian and Gulf officials earlier this month already points to limitations in Iran’s strategy. An emerging Iran-Oman agreement over the Strait of Hormuz ostensibly offered a basis for negotiations over maritime passage, but Gulf governments—and notably Riyadh—resisted arrangements that, in their eyes, would legitimize Iran’s unacceptable claim to control transit in the waterway.

Although their vulnerability gave them an urgent reason to seek an agreement, it also led them to resist a deal on terms that would entrench Iran’s dominance. Their refusal to attend showed that Iran’s ability to disrupt their trade has not translated into acceptance of Iranian terms.

Iran’s expanding regional reach, both directly and through its partners, strengthens its position in negotiations. But it also makes it all the more necessary to reassure its neighbors. A settlement will remain difficult as long as Tehran expects those neighbors to accept lasting uncertainty over their legitimate maritime rights in exchange for relief from the immediate threat of disruption.