Iran is turning deterrence into a weapon of escalation

On 31 October, Iran’s Supreme Leader, Mojtaba Khamenei, instructed the armed forces to answer any future threat with an immediate and effective response, “without geographical restrictions”. He also ordered commanders to update the list of American and Israeli material and non-material assets within Iran’s reach, while strengthening intelligence, doctrine and domestic defence capabilities. The significance lies less in the threat itself than in the strategic logic behind it.

Tehran is not claiming that it can match the United States aircraft for aircraft, ship for ship or dollar for dollar. It is signalling something more consequential: American military superiority may not translate into a controllable conflict or a decisive political outcome. Iran wants the costs of renewed attacks to extend beyond the targets Washington and Tel Aviv choose.

That distinction matters after eight months of war. The United States and Israel began striking Iran on 28 February. A ceasefire followed in April, and a June memorandum intended to end the conflict collapsed weeks later. By September, the Congressional Research Service (CRS), which provides analysis to US lawmakers, described the confrontation as a war of attrition. The Congressional Budget Office (CBO) estimated that US military operations had cost $38 billion by 1 August.

The latest warning also comes as diplomacy remains active but fragile. Qatari mediators returned to Tehran on 30 October, while Washington and Tehran remained divided over sequencing: the United States wants nuclear issues addressed first, whereas Iran wants the US blockade of its ports lifted and oil sanctions eased. Maritime incidents in the Strait of Hormuz have meanwhile underscored how quickly the dispute can spill into global commerce. Iran’s Islamic Revolutionary Guard Corps (IRGC) said four tankers had caught fire, a claim Reuters could not independently verify; UK Maritime Trade Operations (UKMTO), which is run by Britain’s Royal Navy, separately reported a tanker struck by an unknown projectile.

Iran’s message is not simply that it is prepared to fight again. It is that any new campaign could become wider, costlier and harder to end than its adversaries intend. This is deterrence through the threat of escalation: not a promise of victory, but an attempt to deny the opponent confidence that force can be used on limited terms.

READ: Iran’s supreme leader says Tehran will decide when conflict ends if ‘enemies resume attacks’

Deterrence beyond retaliation

Classical deterrence rests on convincing an adversary that the costs of an attack outweigh its benefits. A state can do this by denying an opponent its objective or by threatening punishment. Iran has long relied on the latter, given the gap between its conventional forces and those of the United States. Its missiles, one-way attack drones, dispersed infrastructure and ability to threaten regional bases offer ways to impose costs without winning air or naval superiority.

The war has demonstrated both the reach and the limits of that approach. The CRS says Iran launched hundreds of missiles and thousands of drones across the region, targeting Israel, Gulf states, US military facilities, diplomatic sites, energy production and critical infrastructure. Yet US and Israeli strikes have damaged Iran’s missile infrastructure, and assessments of its remaining stockpile vary. Iran does not need an unlimited arsenal; it needs enough surviving capability to inflict damage, force defensive expenditure and sustain uncertainty.

Khamenei’s call for a response “without geographical restrictions” widens the perceived range of possible consequences, from Israeli territory to US assets elsewhere in the region and potentially non-physical systems. The order to update target lists is not proof that Iran has acquired new capabilities or issued an operational order. It signals the breadth of contingencies its commanders are being told to consider. For Washington, the problem is therefore not only interception rates or launchers destroyed, but the possibility that a new strike could trigger responses across several theatres.

Hormuz turns military risk into economic pressure

Iran’s most consequential leverage may lie where geography meets global markets. The Strait of Hormuz is a narrow passage between Iran and Oman, but its economic importance is immense. Before the war, around 20.9 million barrels of oil per day moved through it in the first half of 2025, equivalent to about one-fifth of global petroleum liquids consumption and roughly a quarter of maritime oil trade, according to the US Energy Information Administration (EIA). Saudi Arabia and the United Arab Emirates (UAE) have pipeline capacity to bypass the strait of about 4.7 million barrels per day, far short of normal flows.

The war has exposed this vulnerability. EIA data show oil flows through Hormuz averaged 14.9 million barrels per day in the first quarter of 2026, then fell to 4.9 million in the second quarter. Flows of liquefied natural gas (LNG) dropped from 7.4 billion cubic feet per day to 0.8 billion. Since most oil moving through the strait is destined for Asian markets, the consequences reach far beyond the Gulf, affecting importers, shipping firms, insurers and manufacturers.

READ: Iran says it continues exchanging messages with US through mediators

This is geoeconomic coercion. Iran need not close Hormuz indefinitely to influence other governments. It can raise the perceived risk of transit, prompt vessels to avoid the route, increase insurance and freight costs, and make energy supplies less predictable. The threat itself can impose costs. But this leverage is double-edged: prolonged disruption would damage Iran’s neighbours, alienate Asian buyers and invite a stronger international response. Tehran can exploit interdependence, but it cannot dictate the world’s response.

The escalation trap

For the United States, this creates a strategic dilemma. A limited strike might fail to eliminate Iran’s capacity or willingness to retaliate. A larger campaign could further damage Iranian forces, but also widen the conflict, endanger Gulf infrastructure and deepen energy disruption. The cost is not merely financial. CRS reported 18 US service members killed and 824 wounded by 15 September, while warning that Washington and its partners faced finite capacity to counter Iranian attacks and absorb their military, economic and political costs.

Iran’s strategy carries an equally serious danger. The broader Tehran defines the targets it might strike, the more likely Washington and Israel are to interpret its preparations as evidence of offensive intent. Defensive measures can then appear threatening; countermeasures invite further retaliation. This is the security dilemma: a policy intended to deter an attack can create incentives for an adversary to strike first, before the threatened capabilities become harder to suppress.

Nor does escalation guarantee diplomatic leverage. Qatar’s latest mediation effort shows that channels remain open, but the two sides still disagree over the order of concessions. Iran wants relief from the blockade and oil sanctions; Washington wants nuclear commitments at the centre of any deal. If Tehran’s threats persuade the United States that renewed war would be too costly, they may strengthen Iran’s bargaining position. If they convince Washington that delay will make Iran more dangerous, they may hasten another round of strikes.

That is the paradox at the heart of Iran’s new posture. It is trying to deter war by making escalation more credible, while increasing the risk that escalation becomes self-fulfilling. Iran may not defeat the United States conventionally, but it can seek to make American power more expensive to use and harder to convert into political success. The decisive question is whether either side can recognise that distinction before deterrence becomes the next trigger for war.

OPINION: The Gulf needs a security order that Washington cannot switch off

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.