The game between Iran and the U.S. is getting more intense.

Iran has been offline for over a month, with only 1%-3% of its international data traffic remaining compared to pre-war levels. Black market Starlink devices are being sold at sky-high prices, and the government is cracking down hard—arresting anyone caught. Food inflation has doubled, and over half of people's monthly income is spent on food. Public services like water, electricity, healthcare, and communication are intermittently disrupted, forcing people to endure.

The biggest variable now is Hormuz Island. It’s the lifeline of Iran’s oil exports, responsible for 90% of the country’s oil shipments annually. If the U.S. military takes it, Iran’s fiscal revenue will be cut in half. The Revolutionary Guard is stationed there, with mines and bunkers ready. On-chain betting indicates a 40% chance of the U.S. taking the island, suggesting that many don’t have high hopes.

Meanwhile, the Strait of Hormuz has been sealed again. Over the past month, a dozen Chinese merchant ships have passed through, while hundreds are stuck in the Persian Gulf, unable to leave. Iran claims “friendly countries can navigate,” but in practice, they’re releasing ships gradually, and recently, they’ve completely shut it down. They’re trying to push oil prices higher and pressure U.S. inflation.

The Houthis have also stepped in, firing missiles at Israel. While their military threat isn’t significant, blocking the Strait of Mandeb is their real trump card. Coupled with cheap drones, this poses a strategic deterrent comparable to nuclear weapons.

Two other small updates: Iran’s missile attack damaged the UAE’s largest aluminum plant, affecting 4% of global capacity, which could drive aluminum prices up; last week, Turkey’s central bank sold $8 billion worth of gold.

Both sides now believe they are winning, but the reality is that the situation is still escalating. The next one or two weeks will be a critical window. Oil prices could surge to $120.