Iran's navy is gone, its missile stockpile is down, and its air force barely exists. And yet former CIA director David Petraeus says Iran could still come out of this war strategically stronger - if Washington lets it keep any control of the Strait of Hormuz.
Petraeus, now chairman of KKR's Global Institute, spoke at the UBS Asian Investment Conference, where he said Iran is in the "process of blinking" on the Strait. That means agreeing to reopen the waterway without charging tolls and without threats of closing it again.
"It appears that that may be in the offing," he said.
That matters because the Strait is where about a fifth of global seaborne oil and gas used to move - so any deal that lets Iran take a cut of traffic, or shut the route off again on short notice, hands Tehran a long-term pressure lever.
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Petraeus was direct about Iran's military shape, with the navy "largely sunk" except for fast boats. The missile capacity is way down, headquarters and bases are gone, and there's no air force to speak of.
But none of that means the threat is over, since Iran can still mine the Strait or use drones, missiles and fast boats to hit commercial ships. That's enough to keep the waterway from going back to how it worked before the war.
The takeaway for investors: military weakness and strategic leverage are not the same thing. Iran's strikes are still landing - including on AI data centers in the Gulf that have already slowed regional tech spending.
The Strait is one piece, while Iran's nuclear program is another - so is its funding of proxy groups like Hezbollah, the Lebanese militia Israel has been fighting since the war started.
Petraeus said those issues need attention, but he doesn't expect them in the near term. "It's not at all clear to me that that's going to be in the near future," he said.
That's the gap between a market-calming deal and a real peace. It's also why the U.S. has redirected 100 ships in its six-week naval blockade and why Trump has told negotiators not to rush.
U.S. Secretary of State Marco Rubio said in New Delhi on Monday that a deal could happen the same day, according to France 24, while also saying the U.S. will give diplomacy "every chance" before exploring "alternatives." Both can be true at once.
That's the kind of stalemate Petraeus is watching.
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