Iran Update Special Report, July 28, 2026

Key Points:

• Three main factions within Iran’s regime are influencing negotiations over control of the Strait of Hormuz: a dominant IRGC-led hardline group demanding total control, a pro-negotiation camp seeking compromise to alleviate economic pain, and an ultra-hardline Paydari Front opposing any talks with the U.S.
• The IRGC-led faction, headed by Major General Ahmad Vahidi, insists on full control of the strait and has resumed attacks on shipping after the failure to secure complete dominance, rejecting Omani-mediated proposals that would ease U.S. sanctions in exchange for reopening the strait.
• Economic hardships from U.S. sanctions, naval blockades, and ongoing conflict have pressured some Iranian leaders, including President Masoud Pezeshkian and Foreign Minister Abbas Araghchi, to push for negotiations to avoid further damage to the Iranian economy and internal stability.
• The Houthi rebels in Yemen, aligned with Iran, have intensified attacks on Saudi shipping and oil infrastructure to disrupt alternative export routes and strengthen Iran’s leverage over the strait, while reportedly sparing Chinese vessels following Beijing’s requests.
• In Iraq, Iranian-backed militias deny involvement in recent drone attacks on Saudi oil facilities, though Saudi Arabia and Jordan report intercepting drones launched from militia-controlled areas; meanwhile, Iraqi authorities are investigating these claims amid ongoing militia aggression against Iraqi Kurdistan and U.S. targets.