What’s Next in Iran?

A lot seems to have happened in the war with Iran over the weekend but most of it was taking place behind the scenes. Fox News reporter Trey Yingst spoke to Trump, who told him Iran only had three outcomes left at this point.

Fox correspondent: “I just spoke with President Trump about the situation with Iran … he said, ‘my question is, if and when do I blow the entire nation up? They better behave'” pic.twitter.com/cucyDjeTGb

— Aaron Rupar (@atrupar) September 20, 2026

Of those three choices, a deal with Iran doesn’t seem to be on the table at the moment. Iran continues to fire at tankers passing through the Strait of Hormuz.

A tanker transiting the Strait of Hormuz was struck by an “unknown projectile” Monday, leaving two crew members with minor injuries, according to the United Kingdom Maritime Trade Operations center.

UKMTO said military authorities informed the agency that the tanker was struck while conducting an inbound transit through the strategic waterway.

Iran, as usual, is also making threats.

IRGC spokesman Hossein Mohebbi said Tehran would change both its weaponry and targets in response to renewed U.S. military action, according to Iran’s Fars news agency.

“We will introduce new weapons with new capabilities into the battle, and the world will be astonished,” Mohebbi said, according to Iran International. He also claimed Iran has targets that have not previously come under attack and is prepared for a prolonged conflict.

So a deal seems to be out for now which leaves two options. We can continue to sit on Iran’s economy until it breaks or we can attack. As to the former, there are lots of signs that Iran’s economy is in deep trouble but so far the impact on people doesn’t seem to matter much to the leadership.

Iran is suffering under increasing economic pressure two months into a renewed U.S. naval blockade of its ports that has choked off oil exports, has deprived Tehran billions of dollars in critical state revenue and is threatening the country with a severe shortage of the foreign currency it needs to pay for remaining imports.

Inside the country, people are reporting new shortages of gasoline and electricity alongside persistent, debilitating inflation that has remained above 80 percent for months. Meanwhile, Iran’s currency, the rial, plummeted to another historic low this month, at more than 2.3 million to the dollar…

Mina, 34, a cafe worker from eastern Tehran, said prices are rising so fast, she has stopped saving for purchases — by the time she reaches her goal, the price has risen again beyond her means. Like other Iranians interviewed for this report, she spoke via messaging apps, on the condition that she be identified only by her first name for fear of reprisal…

Iran’s economy has been badly battered by months of war with the United States and Israel. Thousands of structures were damaged or destroyed by tens of thousands of airstrikes, and attacks on infrastructure have had an outsize impact on unemployment. In July, the International Monetary Fund predicted the Iranian economy would contract by 5.4 percent over the next year.

But the war is also having an impact on inflation here. The FED raised interest rates a quarter percent last week and the Iranians have made it very clear that they are counting on this kind of impact on our economy to save them. This is from the Speaker for Iran’s Parliament.

Straits Taylor Rule:

i = r* + π* + 1.5(π−π*) + 0.5(y−y*) + α(SOH−SOH*) + β(BEM−BEM*), α,β > 0

Let’s see if a hike could open SOH or produce a single barrel 🙂

You can’t 25bp a chokepoint and r* isn’t neutral. It’s SOH risk premium, and We set it.

Stay unanchored !

— محمدباقر قالیباف | MB Ghalibaf (@mb_ghalibaf) September 16, 2026

An explainer:

You can say what you want about Iran but they’re definitely pretty unique in their communication: never seen a country threaten another with a math equation before 😅

For those who didn’t get it: there is a famous monetary policy formula used by the Fed called the “Taylor rule”… https://t.co/y8n81e25a8

— Arnaud Bertrand (@RnaudBertrand) September 17, 2026

For those who didn’t get it: there is a famous monetary policy formula used by the Fed called the “Taylor rule” that says a central bank’s policy rate (i) should equal the neutral real rate (r*) plus target inflation (π*), plus 1.5 times the inflation gap and 0.5 times the output gap (the “i = r* + π* + 1.5(π−π*) + 0.5(y−y*)” part of Ghalibaf’s formula).

Ghalibaf adds α(SOH−SOH*) and β(BEM−BEM*): SOH referring to the Strait Of Hormuz and BEM to Bab El-Mandeb. Both have positive coefficient, meaning the more those chokepoints are choked, the higher the rate the Fed would have to set to fight the resulting inflation.

In a nutshell this is Ghalibaf trolling the Fed, telling them that Iran is – in a very real way – setting American monetary policy.

Of course there’s a huge difference between a 0.25 percent increase here and an 80 to 100 percent inflation rate there, but again that probably doesn’t have much impact on the leadership. They have everything they need so they can just keep talking and making threats.

So option two of the three Trump outlined is working but not quickly. And that leaves option three, a full out bombing of Iran and possibly some of their allies. Over the weekend, Trump apparently canceled plans to strike the Houthis.

President Donald Trump has reportedly held off on planned U.S. military airstrikes against Houthi targets in Yemen over the weekend.

“We’re in constant communication with them,” Trump told Fox News in an exclusive phone call Sunday morning. “They don’t want to fight us.”

Trump had ordered the Pentagon to prepare strikes following a Thursday phone call from Saudi Crown Prince Mohammed bin Salman, who implored him for assistance.

By midday Sunday — with target lists approved and warplanes actively being loaded with munitions — the president called off the operation to give time for diplomacy amid this week’s United Nations General Assembly.

So as of now, Trump seems to be disinclined to go for that last option. And this is really the same game Iran has been playing all along. They make threats and promise reprisals and then just when Trump is about to drop the hammer, they suddenly express an interest in negotiations. That drags on for a week or two and then we’re back to threats and tough talk.

Iran’s hardliners are never going to comply with a U.S. deal. They are still counting on a rescue from U.S. Democrats that could be coming early next year. Until then, they will keep playing the same game.

Editor’s Note: Do you enjoy HotAir’s conservative reporting that takes on the radical Left and woke media? Support our work so that we can continue to bring you the truth.

Join HotAir VIP and use promo code FIGHT to receive 60% off your membership.