A watershed in Hormuz: Can US hegemony hold?

While the US has extended the two-week ceasefire in the Middle East, prospects for a new round of US-Iran talks remained unclear as of 21 April. Even if both sides do meet in Islamabad as scheduled, the differences are so deep that it is highly unlikely they would reach any substantive outcome.

The joint US-Israeli strikes on Iran in late February have led to a situation that is now far from what US President Donald Trump likely envisaged at the outset. The war has dragged on, and the vital global energy artery that is the Strait of Hormuz is all but paralysed, while Iran’s resilience has exceeded external expectations, and the US is finding it harder and harder to extricate itself in the face of mounting media and diplomatic pressure.

Politico reported on 17 April that State Department cables show the Iran war is putting US global security ties at risk and damaging its international reputation, especially among the world’s Muslims, leaving the US facing a loss of trust and even rising anti-US sentiment.

The report cited concerns from several US embassies abroad, which said Iran used social media to erode the US’s discursive influence and win sympathy for Tehran. In contrast, the US has taken a backseat in this information war.

Take Bahrain for example: at the onset of the war, Iran attacked the headquarters of the US Fifth Fleet in the Bahraini capital of Manama, forcing the US to hurriedly withdraw this core naval force from the Middle East in early April.

The Bahraini government now faces questions over whether the US would abandon it and leave it to fend for itself under Iranian threat. Politico, citing cables from Bahrain, reported that the war has led many locals to believe the US sacrificed Bahrain to protect Israel.

The Iran war also strained US relations with some European allies. Seeing Washington stir up a hornet’s nest in the Middle East, some countries are no longer pinning their hopes on the US to resolve the crisis.

Last week, French President Emmanuel Macron and British Prime Minister Keir Starmer convened a summit in Paris to discuss freedom of navigation in the Strait of Hormuz, joined in person by German Chancellor Friedrich Merz and Italian Prime Minister Giorgia Meloni, with representatives from dozens of other countries participating via video conference. The aim was to find a third way between Iran’s blockade and the US counter-blockade.

The US’s current predicament has led some observers to recall Britain’s “Suez moment”, a reference to the 1956 Suez Canal crisis that marked the decline of British colonial hegemony. Has the Iran war forced the US to confront its own “Hormuz moment”?

A recent report by Chinese securities firm CITIC Securities argued that the Iran conflict would reshape the global economic order and could become a watershed for US global hegemony. Bridgewater Associates founder Ray Dalio made a similar point in an article in March.

In Dalio’s view, the “final battle” of the Iran war would be over who controls the Strait of Hormuz. If the US failed to seize control, it would be what the Suez Canal crisis was for Great Britain. He wrote: “This decisive “final battle” that determines the winners and the losers and whether the empire survives or falls reshapes history because people and financial flows quickly and naturally run from the losers.”

Dalio added: “If, on the other hand, the Strait of Hormuz is left in the hands of the Iranians to use as a weapon to threaten American allies in the Gulf and the world economy more broadly, everyone will be hostage to the Iranians, and Donald Trump will be perceived to have picked a fight and lost. He will have left US allies in the region with a huge problem, and he will lose credibility, especially given what he has said.”

Although it cannot be directly equated with a “Suez moment”, nor would the US necessarily lose its global dominance immediately because of the Iran war, the global landscape may already be quietly shifting. For China, which is engaged in intense geopolitical competition with the US, what might this signify?

If the US becomes deeply entangled in the Middle East, its attention in the Indo-Pacific will inevitably be diluted, potentially opening a strategic window for China. Meanwhile, disappointment among Gulf states and an erosion of trust in the US could also create new space for China.

Amid intensifying tensions in the Middle East, Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan visited China last week, and this week Chinese President Xi Jinping held a phone call with Saudi Crown Prince and Prime Minister Mohammed bin Salman Al Saud. Before this, as Gulf states advanced industrial diversification, China’s presence in the Middle East had already been growing. Following the Iran war, Gulf countries are likely to pursue greater strategic diversification, which is expected to further expand the room available to China.

However, as the conflict drags on, beyond the impact of war on the economy and energy supplies — which makes it difficult for China to remain unaffected — the risk of China being drawn into the conflict is also rising.

After Trump warned that China would face 50% tariffs if it provided military aid to Iran, the US military on 19 April seized an Iranian container ship, stating that the vessel — which had previously travelled from China — was transporting dual-use goods that could be used in weapons production. This is expected to place new diplomatic pressure on Beijing, trigger a fresh round of China-US strategic manoeuvring, and cast a shadow over the upcoming summit between the two heads of state.

There has been some speculation that the Chinese naval escort task force currently conducting routine operations in the Gulf of Aden and waters off Somalia could potentially take part in tanker protection duties. While these claims have not been officially confirmed, as tensions in the Middle East remain high, it is not entirely implausible that China may be compelled to consider maritime security responses, or even contemplate counter-blockade measures.

At present, the US finds itself in a dilemma: escalating the war further could lead to uncontrollable economic, social and political costs, while stepping back would be seen as a retreat of its hegemony. This is precisely the pressure test posed by a “Hormuz moment” for America.

Yet in this globally consequential turmoil, it is equally unrealistic for China to remain a detached observer and simply reap the gains. How to exercise influence in line with international expectations, while also securing its own strategic interests and avoiding being passively drawn into the fray, is likewise a test for Beijing.

This article was first published in Lianhe Zaobao as “美国面对霍尔木兹时刻？”.

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