The open-market dollar traded at about 2.24 million rials in Tehran on 7 September, after touching 2.30 million during the previous session. That is a rise of roughly 6 percent in a week and about 44 percent over six months. The Central Bank continues to quote something near 1.5 million, a rate almost nobody outside the state apparatus can access. The gap between the two has more than doubled since February, which is the usual signal that a managed rate has stopped managing anything.

The threat to close the Strait of Hormuz is the oldest line in Iranian deterrence. It has been recited since the Iran-Iraq War, repackaged after every sanctions tightening, and trotted out reflexively whenever a US carrier strike group enters the Gulf. The line works because the audience accepts the premise: that Iran could close the Strait if it wanted to. The premise is half true. Iran has the capability to disrupt traffic for days, possibly weeks. What it does not have is the capability to survive doing so.

The strategic logic of Iran’s Hormuz threat rests on the assumption that the cost of closure to the outside world exceeds the cost of closure to Iran. This assumption is correct in relative terms and misleading in absolute terms. Iran would suffer severely from a Hormuz closure that it initiated. Its oil exports, its import supply chain, and its remaining international financial connections all depend on the strait remaining open. The question is whether the political leadership in Tehran would initiate a closure despite these costs, and under what conditions the answer would be yes. The Iranian domestic economy is the ledger that answers that question.