Iran shows defiance with marches as conflict drains global economy

Hundreds of thousands of pro-government supporters took to the streets of Tehran, chanting anti-American slogans in a show of strength for Iran's ruling establishment. The demonstrations came hours after President Donald Trump said he could "annihilate" Iran and that "anything could happen". Earlier, Iran claimed it had attacked a tanker attempting to pass through the Strait of Hormuz, a vital waterway for global oil shipments.

The marches were a carefully staged response to recent US strikes, which have battered Iran's military and sent its economy into free fall. The head of Iran's paramilitary forces said the nation had "defeated the army of the world's greatest superpower", a claim that ignores the heavy toll of sanctions and the rising cost of living. With inflation in Iran near 80%, public anger is real, but the regime's grip on power appears secure for now. It controls the Strait of Hormuz and, through it, a lever on the global economy.

In Washington, the president continues to talk with bluster, raising the possibility of renewed large-scale attacks. "We're already winning," he said, when asked about a deal. But countries around the world are paying a heavy price for the conflict. Oil prices have climbed, and the US has tried to ease the pressure by discreetly escorting tankers through the strait, often with their tracking signals turned off and using routes near the Omani coast. The tactic has been especially important for Saudi Arabia, whose east-west pipeline was damaged in strikes last week. Meanwhile, Yemen's Houthi forces, allied with Iran, have seized control of the country's Red Sea coast, blocking Saudi exports through the Bab al-Mandab Strait.

The Houthi advance has reignited a frozen conflict and threatens to deepen Yemen's humanitarian crisis. Saudi Arabia, like the United States, appears stuck without a clear military or diplomatic path forward. Analysts say a more proactive Saudi approach over the summer might have stabilised dynamics with the Houthis, but that opportunity was missed.

Iran's president is due in New York next week for the UN General Assembly, offering a possible opening for negotiations. A phased agreement, one that could reopen the Strait of Hormuz in exchange for gradual economic relief, is one possible shape of a deal. But the leverage held by Iran and its allies, and the domestic political pressures facing Trump ahead of midterm elections, complicate any settlement. Those same pressures are mounting on both sides: energy prices in the US and the UK are soaring, and the economic cost of the war is estimated at close to a trillion dollars for the American economy. As the winter months approach, the strain is likely to intensify, forcing a reckoning in Washington and perhaps a change of course.