That sure is blurry, all right. We may have to keep asking questions to narrow down the cause.
Are you really running iOS 18 on your iPhone-- that is not released yet, and if you're running a Beta version of the software, you would expect some glitches. Perhaps you actually upgraded to iOS 17?
I can't find on here if you have said that you are using iCloud Photos to sync your iPhone and Mac. Are you? And if you are using iCloud on your phone, do you have "Optimize Storage" selected in Settings>Photos? If you do, then you may be seeing a reduced resolution image to save storage space. This usually clears up when zoomed, because Photos will grab the full sized image from iCloud when it's needed. Also try hitting the Edit button-- that, too, should bring in a higher resolution image. The info window gives the size of the referenced file in iCloud.
Since zoom doesn't clear up the picture, can you tell us how much free memory you have on your phone? When I go to Settings>General>iPhone Storage, my iPhone says

that I have used 74 GB out of 128 GB. My phone has 54 GB of free memory, plenty of room to display full images when I need it to. What does yours, say? (By the way, these numbers fluctuate as the phone needs more or less temporary storage, so I really have less than 54 GB that's actually useful.)
Also, was your phone plugged in, and did you have a strong internet connection when you zoomed in?
Storage may be the problem, but if not, we can look at other possibilities...