Extermination by a technically superior foe is losing everything. Iran is not that stupid.
No. They believe that:
1) the pro-US American decision makers will avoid losing from five to fifty cities, and will not attack Iran by nukes without very serious reason (like attack on US territory itself).
2) they knew that Israel is trying to attack them first.
3) the pro-Isralis American decision makers will try to avoid destruction of Israelies cities.
4) Continue of US blocade will cause end of Iranian state.
5) Crazy religious fanatics in Israel can try to attack Iran with their nuclear forces.
6) Americans with their vastly superior fleet and intelligence rather sooner than later will find out positions and routes of their nuclear ships and, will get capability to eliminate all those ships by one strike.
From Iran's point of view they can:
1) Simply wait. In this case Israel will nuke them anyway, because they already preparing, and, quite likely, America will try to attack Iranian nuclear forcese first. And either economic blockade will destroy their regime, or "exclusive ties" with Russia will cause them losing their independence.
2) Beg for direct protection Russia and China. It will make Iran half-colony of those countries and will cost Iran even more, than buying the nuclear fleet.
3) Alleviate and make few steps back. In this situation they win nothing, only increase gravity of their situation by losing the only leverage they have.
4) As they are in the situation "use it or lose it" they can try to attack American and Israeli cities right now, while they are unprepared. It will definitely cause significant retaliation strike that will kill up to 50-80% of Iranian population. But if Americans understand this conception (and they do) it can push them to alleviate, remove blockade and make mutually acceptable peace deal before such strike is committed. But also it is possible that they might choose (as you already suggested) to hold positions and wait, accepting the risk of the said attack, believing that their threat of retaliation is good enough.
5) As they are in the situation "use it or lose it", they can slightly and accurately escalate, and eliminate, by the counter-force strike, Israel's nuclear forces with virtually zero civilian losses. From their point of view, pro-Americans among US decision-makers might decide that it's important to protect American cities (and don't attack Iran, because it will cause destruction from five to fifty US cities) and pro-Jews among US decision-makers might decide that if the bulk of Israel's nuclear forces already destroyed, they should avoid escalation and certain death of ten millions of Israel's civilians.
So, from their point of view, it might be their best option, and they did exactly that.
Now, it's your turn as an American decision maker:
1) Alleviate and defuze the situation. In this case you, may be, losing some of your influence in Middle East and have to live in the world with at least one more additional nuclear player.
2) Wait and try to find out where exectly Iranian nuclear ships are located, make preparations and attack their ships. It will take days or even weeks anyway, and there is high probability, that Iranians will attack your cities while they still can do it, and when their civilians are in shelters, if they realise what exactly you are doing.
3) Attack Iranian cities immediately, ignoring Iranian nuclear forces. In this case Iran will be virtually annihilated, but America will definitely suffer terrible damage - losing from five to fifty cities, and, what is worse, it may provoke Russia and China to attack the USA too, while US nuclear capabilities are exhausted by its massive attack on Iran. (At least because from Ru&Chi point of view, if America doesn't care about US civilians, it means that their detterence doesn't work anymore, too. And it's the best possible opportunity to wipe out American nuclear forces with suffering as minimal retaliation as it's possible).
4) Suggest your option.
What would you choose in this situation?
