Iran’s Regime: Survival and the Transformation of Its Mechanisms
Iran’s Regime: Survival and the Transformation of Its Mechanisms
Key Notes
Nearly eight months after the US-Israeli strikes of February 28, 2026, the Islamic Republic has lost its Supreme Leader, most of its oil revenue and much of its regional network. A US naval blockade has cut crude loadings from about 2 million barrels a day in March to around 250,000, shipping in Hormuz remains under attack, and the Houthis have opened a second front against Saudi Arabia.
The regime has long relied on six mutually reinforcing mechanisms: sanctions evasion, Russian and Chinese backing, a regional proxy network, internal control, chokepoint leverage and military capacity, and the war has weakened five of them. Internal control still holds, with repression rising and elite cohesion maintained by concentrating power in the Islamic Revolutionary Guard Corps (IRGC), whose unity has become the regime’s main safeguard.
Over the next six to nine months, the regime most likely survives as a narrower, poorer and more repressive state. Hormuz, its main bargaining chip, is losing value as shipping adapts, and the missing stock of 60%-enriched uranium remains the variable most capable of shifting the outlook. For markets, the main exposures are the chokepoints, Iraq’s oil channel and the uranium question.
Background
A persistent feature of contemporary geopolitics was the relative stability of the Islamic Republic of Iran despite sustained internal and external pressures. The regime has endured armed conflict, recurrent domestic unrest, and extensive international sanctions. This durability could be associated with a combination of internal security consolidation, institutional design, and adaptive economic and strategic practices. These characteristics position Iran as a relevant case for examining the conditions under which authoritarian systems persist under pressure and for assessing the likely future effectiveness of external coercion and domestic mobilization.
The foundations of this resilience were established in the early post-revolutionary period. Following the 1979 revolution, the state confronted internal opposition, social unrest, the Iran - Iraq War (1980 – 1988), and the expansion of U.S.-led sanctions. In response, the regime developed mechanisms aimed at long-term survival, including alternative trade networks, diversified economic partnerships, and institutional structures designed to manage dissent. These early adaptations contributed to a system that prioritizes regime continuity alongside governance.
From 1979 to 2023
Iran has expanded its regional influence through indirect means. The development of a network of aligned non-state actors across Iraq, Syria, Lebanon, and Yemen – often referred to as the “Axis of Resistance” – has enabled Iran to project influence while limiting direct confrontation. Strategic relationships with countries such as China and Russia have further provided economic and diplomatic alternatives to Western isolation. These patterns suggest that Iran’s external posture was likely oriented toward asymmetric strategies and diversified partnerships.
Sanctions have been a central tool of external pressure, typically intended to weaken state capacity or induce political change. In the case of Iran, however, evidence indicates that sanctions have not produced regime change. Instead, they have coincided with processes of economic adjustment and political consolidation. Over time, Iran has developed indigenous military and technological systems and established mechanisms to circumvent sanctions sufficiently to maintain core state functions. Those mechanisms include:
Circumvention of sanctions: Tehran created ways to sufficiently circumvent sanctions in order to sustain essential state operations, as well as domestic military and technological systems.
Support from external actors: China mostly puts economic interests before direct military engagement, while Russia offers diplomatic, military, and technological support.
Proxy network: This structure included Hamas in Gaza, Hezbollah in Lebanon, Assad in Syria, the Houthis in Yemen, and Popular Mobilization Forces in Iraq. Iran used its axis of resistance as a forward-defense shield to project regional power and deter direct attacks.
Domestic repression and coercive tactics: The regime's continuous determination to employ coercive tactics to maintain control is further demonstrated by its domestic repression.
Domestic protest movements have also represented a recurring source of pressure on the regime. However, protests alone have not resulted in regime change. Research on comparable cases suggests that large-scale mobilization becomes politically consequential when combined with elite fragmentation or defections within security institutions like Egypt in 2011. For instance, even though mass protests intensified pressure on President Hosni Mubarak, the decisive factor was the military’s refusal to continue fully backing his rule. The armed forces ultimately withdrew their support and compelled Mubarak to step down after decades in power. This illustrates that sustained popular mobilization is more likely to produce political change when it coincides with divisions among governing elites and security forces. For Iran, this suggests that widespread protests may weaken regime stability, but meaningful political transition would likely depend on fractures within the political and security establishment itself.
Despite U.S. sanctions, Iran has continued to sell crude oil, mainly to countries such as China, using networks that help it avoid sanctions and maintain access to international markets. The United States has tried to limit these exports, but completely stopping Iranian oil could also affect global oil supplies and prices. This raises the question of whether sanctions are fully enforced because of the wider need to keep global oil markets supplied. Arguably, the U.S. may have de-prioritized enforcement because of competing global interests, concerns about escalating tensions with China, and the desire for lower petroleum prices. Iran’s ability to continue exporting crude shows how it has adapted to sanctions and identified strategies to keep generating revenue despite international pressure.
After 2024
Iran's ability to survive has historically depended on several mutually reinforcing mechanisms: domestic military and technological capacity, alternative financial and trade channels, support from Russia and China, a regional proxy network that provided strategic depth, coercive security institutions, and leverage over the Strait of Hormuz. The current conflict has weakened some of those mechanisms without necessarily eliminating the regime itself. The critical question is whether Iran can replace the missing mechanisms – particularly its regional proxies, leadership cohesion, and economic access – or whether their loss creates the internal fractures that eventually make regime survival unsustainable.
Impact of the war on Iran’s survival mechanisms:
Circumvention of sanctions: Sanctions on Iran quickly turned into active US naval blockades. The brief 60-day break allowing oil exports collapsed, leading to strict renewed US naval enforcement, heavy crackdowns on illegal oil tankers, and tightened international restrictions - Transformed
Support from external actors: Moscow significantly increased its sharing of satellite and battlefield intelligence on U.S. and Israeli military assets, radar tracking, and warship locations. Beijing played a quieter yet critical role by upgrading Iran's electronic warfare and sensor networks - Fell short of expectation
Proxy network: The network became fragmented, and severely degraded. It broke into isolated groups focused purely on their own local survival - Weakened
Hamas in Gaza: “disseminated” after October 2023
Hezbollah in Lebanon: “decapitated” after September 2024
Assad in Syria: toppled down in December 2024
The Houthis in Yemen: preserved status at time of writing in October 2026
Popular Mobilization Forces in Iraq: expected disarmament in June 2027
Domestic repression and coercive tactics: The Iranian government intensified its domestic repression and coercive tactics - Unchanged
Leveraging the Strait of Hormuz: Iran exploited its strategic leverage through the Strait of Hormuz, which imposes substantial economic costs on regional and international actors. It is also attempting to exploit, through The Houthis in Yemen, a strategic leverage over Bab al-Mandab Strait - Discovered
It is difficult to forecast where Iran will be in the coming years. However, examining the factors that allowed the regime to survive provides a clearer way to understand its future. Iran has shown that it can adapt to sanctions, military pressure, and domestic unrest, but several of the tools that supported its survival have now been weakened. The loss of regional influence, changes within its leadership, economic pressure, and greater dependence on internal security could make the regime more vulnerable than it was before 2023. At the same time, its domestic military capacity, relationships with China and Russia, and control over key strategic assets such as the Strait of Hormuz could continue to support its survival. Ultimately, the key question is whether Iran can replace the tools it has lost or whether their absence will create divisions within the regime that become difficult to contain.
China and Russia could remain important to Iran’s ability to recover, but it is unclear how much they would actually be willing to provide beyond economic and diplomatic support. If the regime survives the current war and finds a way to reopen the Strait of Hormuz, Iran will likely emerge weaker, with less regional influence, greater economic pressure, and a stronger focus on internal security. This also raises the question of whether members of the political and security establishment could begin to defect. As stated above, while protests alone may not be enough to bring down the regime, defections by senior officials or security forces could seriously weaken its ability to maintain control.
Overall, the interaction between institutional resilience, coercive capacity, and adaptive strategies will likely remain central to the regime’s stability. Future developments will depend on whether these underlying dynamics are maintained or disrupted.
Forecast
The regime most likely survives the window by leaning on coercion as its other tools weaken, so survival rests on the cohesion of the Islamic Revolutionary Guard Corps (IRGC).
Held constant: This forecast holds four external variables constant. The US naval blockade remains Washington’s main lever, talks continue, and there is no ground invasion; the November midterms are not expected to change this. Israel continues to strike Iran and Hezbollah as it sees fit, whoever wins the October 27 election. Russia and China stay out of direct military intervention, and no other shock hits global demand.
Assumptions: The forecast also rests on four assumptions. Survival means the continuity of the system, not of any particular leader. The Islamic Revolutionary Guard Corps (IRGC) holds the veto over the war and over any deal. The Hezbollah precedent applies in Iraq, but only as far as US pressure and the weakness of Baghdad’s government allow. Finally, the missile data dates from May 2026 and the uranium data from June 2025, and Iranian economic data is unreliable.
1. Sanctions circumvention, now blockade evasion: weakening
Current: Since the blockade's reinstatement on July 14, no new Iranian oil has left the Gulf, and Iran is living off oil already at sea. August loadings were roughly 220,000–255,000 barrels a day, against about 2 million in March. The main leak is Iraq, where Iranian crude is reportedly blended and re-exported as Iraqi, partly overland.
Forecast: Revenue stays crushed as stored oil runs down. Iraq remains the main leak, because Washington's strongest tool against it, sanctioning Iraq's state oil marketer, would put far more oil at risk than the leak it closes.
Monitor:
Iranian loadings and oil held at sea, from tanker trackers such as Kpler and Vortexa.
US Treasury designations of Iraqi firms and banks.
Reports of tankers faking their positions off Basra.
Market implication: Iranian barrels stay largely out, which supports prices. The non-Iranian Gulf exports moving under US naval cover partly offset that. The tail risk is in Iraq. Sanctions on the State Organization for Marketing of Oil (SOMO), which Washington has already warned Baghdad about, would hit exports that ran near 3 million barrels a day in September, and the budget that depends on them.
2. External support (Russia, China): weakening in practice, unchanged in intent
Current: Russia provides satellite intelligence on US forces. China provides navigation, radar and electronic-warfare technology. Neither has intervened directly. No Iranian crude has reached China through Hormuz since July 14, so the oil lifeline was cut by the blockade, not by Beijing.
Forecast: China's interest tilts toward reopening Hormuz. Two Chinese shipping majors that carried half its Middle East crude have kept their tankers out of both straits since late July. Expect Beijing to press for a deal rather than arm Tehran. Moscow's help stays at intelligence and drone know-how. However, Russia is benefiting from increased oil prices and American pressure on Ukraine to hold attacks on Russian petroleum infrastructure.
Monitor:
US sanctions on Chinese or Russian entities for military support to Iran.
Chinese arms or defense deals with Saudi Arabia and other Gulf states.
American posture on Russian oil and the war in Ukraine, and efforts to allow Russian oil back on the markets.
Market implication: The channel that matters is US–China friction. Washington has floated secondary sanctions on countries still trading with Iran. Applied to China, that turns Iran into a trade-war issue, not just an oil one. Chinese defense sales in the Gulf would show Beijing ranking Gulf business above Tehran. Sanction on Russian oil export, if lifted, could alleviate the market, at the expense of Ukraine.
3. Proxy network: weakening overall; Houthis escalating but contested
Current:
Houthis: they have hit eight Saudi tankers since their blockade began on July 22. In September they launched their heaviest strikes on Saudi territory since fighting resumed and pushed toward Bab al-Mandab. The Houthis report heavy Saudi airstrikes in return. Trump reportedly refused Crown Prince Mohammed bin Salman's requests for US strikes.
Mecca Joint Defence Agreement (Saudi Arabia, Turkey, Pakistan): Turkey has offered to meet Saudi military needs, and Pakistan has thousands of troops and a fighter squadron in the kingdom.
Iraq: the US-led coalition left on September 30. The Popular Mobilization Forces (PMF) face a June 30, 2027 disarmament deadline after a 90-day no-attack period. Several groups back the plan, but Kataib Hezbollah denies any understanding. A law entrenching the PMF is before parliament.
Lebanon: Hezbollah, weakened militarily, rejected the full disarmament in the 2026 ceasefire.
Forecast: The network narrows to Houthi pressure on Saudi Arabia and the Red Sea, plus Iraq as an economic lifeline. Houthi escalation now carries a cost in the Mecca pact, though the pact may take up to a year to become fully operational. In Iraq, the PMF's fragmentation means the country may split rather than follow Kataib Hezbollah. The June 30 deadline likely slips.
Monitor:
Mecca pact decisions and any Turkish or Pakistani deployments.
Houthi advances along the Red Sea coast.
The PMF law vote.
Actual weapons handovers in Iraq and Lebanon.
Iraq's pipeline exports through Turkey.
Market implication:
Saudi exports are exposed on both coasts. By early September, Riyadh had rerouted about 1.9 million barrels a day through Egypt's pipeline to the Mediterranean. Then the East-West Pipeline feeding its Red Sea coast was shut after drone attacks on September 11. Saudi-linked tankers at Yanbu now pay war-risk premiums near 3% of vessel value, against 0.2–0.3% for other Red Sea traffic. A Houthi move on Bab al-Mandab would hit that route and Suez Canal revenues.
Iraq: its exports recovered in August only after some tankers were allowed through Hormuz, which gives Tehran leverage over Baghdad's revenue. A one-year deal with Turkey allows 750,000 barrels a day through the northern pipeline, but actual flows are nearer 200,000, so that leverage fades slowly.
Reconstruction: proxy disarmament unblocks reconstruction capital in Lebanon, Syria and Iraq. The Gulf states that would fund it oppose Hezbollah.
4. Internal control: repression rising; elite cohesion holding but concentrating in the IRGC
Current: Iran carried out 532 executions in the first eight months of 2026 under a new espionage law with fast-tracked trials, and made over 4,000 war-related arrests by May. Mojtaba Khamenei, who succeeded his father in March, has long-standing IRGC ties and reportedly sides with the Guards against the civilian negotiators, though the Institute for the Study of War (ISW) reads the split as tactical. The rial lost about a third of its value between March and early September.
Forecast: Repression holds the street. Survival rests on whether the Guards stay united as the economy and their own revenue shrink.
Monitor: Execution counts, IRGC appointments and dismissals, officials contradicting the Guards, security-force pay arrears, strikes in oil and the bazaar, and the free-market rial rate.
Market implication: IRGC dominance makes a deal harder and sustains the chokepoint premium, so Iranian barrels return only through a deal. A fracture would not necessarily calm markets, since a weaker center could make attacks on shipping less predictable.
5. Chokepoint leverage (Hormuz, Bab al-Mandab): weakening, a wasting asset
Current: At least six vessels were hit in Hormuz between September 27 and October 2, and Iran keeps adding ships to its transit blacklist. Yet non-Iranian Gulf exports have reportedly reached 8.4–10.8 million barrels a day under US naval cover.
Forecast: Hormuz loses value as a bargaining chip as traffic adapts. That pushes Tehran either to trade it or to escalate to restore it. Bab al-Mandab moves the other way: Houthi pressure is rising, but it now meets a Saudi response and possibly the Mecca pact.
Monitor:
Daily transits from the International Monetary Fund's PortWatch.
Incident reports from UK Maritime Trade Operations (UKMTO).
War-risk premium quotes in Lloyd's List.
Any sign of mining.
Market implication: Lloyd's List puts Hormuz war-risk premiums at 40–60 times pre-crisis levels, worth roughly $7–8 on a barrel of crude. In the Red Sea, premiums took months to follow politics, and reinsurers expect part of the repricing to be permanent. Even a deal therefore lowers shipping costs slowly. Asian importers carry most of the cost.
