Iran Turns to Pakistan, Russia and China Trade Routes as US Naval Blockade Squeezes Oil Exports
Iran Turns to Pakistan, Russia and China Trade Routes as US Naval Blockade Squeezes Oil Exports
Iran is leaning on overland and Caspian trade corridors through Pakistan, Russia, Central Asia and China to keep some oil and goods moving under a US naval blockade, according to recent reports and analysis. The effort, however, is described as slow, costly and limited in scale.
The assessments follow President Donald Trump's announcement last Thursday that the United States will not launch military strikes on Iran before the midterm election. Mr Trump also said the blockade of Iran's oil exports would stay fully in place. Some analysts now question his assertion that Iranian exports have been halted. Export volumes are lower than before, they say, but not zero.
Sanctions hurting, but not delivering desired result
Husain Haqqani, a former ambassador who is now a senior fellow and director for South and Central Asia at the Hudson Institute in Washington, wrote in World Geostrategic Insights on September 29 that sanctions are hurting Iran without achieving the outcome Washington wants. He said multiple trade routes are helping Tehran evade restrictions.
With access through the Gulf restricted, Iran is using costlier northern and eastern corridors, he said. Pakistan, Russia and China offer alternatives to routes controlled by Western powers, so Iran is no longer strictly dependent on the Strait of Hormuz.
Tajikistan receives Iranian fuel
Separately, Tajikistan began receiving Iranian oil and petroleum products in late August, according to media reports. Tajikistan's Energy and Water Resources Ministry told the Asia-Plus news agency that deliveries followed talks on expanding cooperation in the oil and gas sector. The ministry did not disclose volumes, commercial terms or how the products were transported.
Pakistan's role
Iran shares a 900km border with Pakistan. Trade between the two countries is modest, at $3.13 billion in March 2025, but analysts say it matters because cash payments and barter help Iran avoid dollar-clearing requirements.
Pakistan mediated a ceasefire between Iran and the US in June. Soon afterwards, it allowed goods originating from third countries to enter Iran overland through its territory. When Iran attempted to blockade the Strait of Hormuz, Pakistan designated six road corridors linking Karachi, Port Qasim and Gwadar to the Gabd and Taftan border crossings in Balochistan. The crossings have been used to move daily essentials, fuel, electricity and gas.
The two countries are implementing a barter mechanism and the TIR Convention of 1975, which allow trade outside traditional banking channels. Pakistan has also reportedly granted temporary exemptions from normal banking requirements for essential exports to Iran, and eased rules for transit trade between Iran and Central Asia. Analysts note this fits Islamabad's long-standing aim of becoming a transit and energy corridor between the Middle East and Central Asia.
Russia and the North-South corridor
Iran and Russia have moved to settle bilateral payments in rials and rubles, bypassing the SWIFT system. Their trade stands at only $5 billion, but it avoids Western banking restrictions. A 2025 strategic partnership treaty formalised ties built over two decades.
A central piece is the International North-South Transit Corridor, set up in 2000 by India, Russia and Iran as an alternative to the Suez Canal route. The 7,200km multimodal network has gained importance for Russia since the 2022 invasion of Ukraine. The Eurasian Development Bank estimates that once the corridor is completed in 2030, it will carry 30 million tons of cargo and earn Iran $1.5 billion in transit fees. Completing the Rasht-Astara railway is the next step.
China and rail links
Rail links through Central Asia are the main land connection between Iran and China. A route from Yiwu and Xi'an through Kazakhstan and Turkmenistan to Iran opened in 2014 and was extended in 2025. Analysts say these lines have become more valuable since the war between Iran and the US began and the blockade was imposed. Pakistan also figures in the Iran-China relationship because many transport links pass through its territory.
Financial pressure remains
Iran's finances are under strain. The Maritime Executive reported on October 8 that Iranian oil held in storage off Malaysia and in China is likely to run out this month. This could cut government revenue to about 40 per cent of what was budgeted for the year.
The report said Tehran is studying alternative export routes, including railways through Sarakhs and Turkmenistan to China, and a pipeline link to Zaghmarz on the Caspian Sea. That pipeline was built to import Russian oil, and Caspian tankers are shallow-draft with limited capacity. Azerbaijan and Kazakhstan are not on friendly terms with Iran and would be unlikely to let Iranian oil enter their pipeline systems.
The analyst who wrote the piece concluded that, with help from its neighbours, Iran is gradually working to loosen the pressure, but that the process remains slow and difficult.