How Iran evades US naval blockade

How Iran evades US naval blockade

Announcing last Thursday that the United States will not launch military strikes against Iran before the midterm election, President Trump also made clear that the ongoing US naval blockade of Iran’s oil exports will remain in full force. Some are now questioning this assertion while Iran makes its moves. Trading through Balochistan, the Caspian and China remains key to its efforts to bypass the sanctions. Iranian export volumes are lower than before, yes, but not zero, as President Trump asserts. Iran has not been completely crippled. Sanctions are hurting Iran without delivering Washington’s desired outcome, says former Ambassador Husain Haqqani, now a Senior Fellow and Director for South and Central Asia at the Washington-based Hudson Institute, in a piece published in World Geostrategic Insights on September 29. Media is now also reporting that late in August, Tajikistan began receiving Iranian oil and petroleum products. The deliveries began following talks between the two countries on expanding cooperation in the oil and gas sector, Tajikistan’s Energy and Water Resources Ministry told the Asia-Plus news agency. Trading through Balochistan, the Caspian and China remains key to its efforts The Tajik ministry, however, did not disclose the shipment volumes, their commercial terms, or how the oil and petroleum products were transported to Tajikistan. Tajikistan is not the only outlet for the Iranian crude exports. Multiple trade routes are helping Iran evade sanctions, says Haqqani. With Gulf access restricted, Iran is using costlier northern and eastern corridors, with Pakistan, Russia and China providing alternatives to Western-controlled routes. Strictly speaking, Iran is no longer constrained to trade via the Strait of Hormuz. Iran shares a 900km-long, porous border with Pakistan. Trade between the two countries is not large. In March 2025, it was $3.13 billion. To circumvent sanctions, this relatively small trade remains important for Iran, especially because cash payments and barter arrangements help it bypass dollar-clearing requirements. Pakistan is also looking to expand trade with Iran. Soon after mediating a ceasefire between Iran and the US in June, Pakistan allowed the entry of goods originating from third countries into Iran overland through Pakistan. When Iran attempted to blockade the Strait of Hormuz, Pakistan designated six road corridors linking its ports in Karachi, including Port Qasim, and Gwadar, to the Gabd and Taftan land crossings through Balochistan for trade with Iran. These crossings have enabled exchanges of daily essentials as well as fuel, electricity and gas. Iran and Pakistan are currently implementing a barter mechanism and the Customs Convention on the International Transport of Goods under the Cover of TIR Carnets (TIR Convention, 1975), enabling them to bypass sanctions and avoid scrutiny in traditional banking channels. Reportedly, Pakistan often grants temporary exemptions from normal banking-instrument requirements for essential exports to Iran. Pakistan has also eased some export rules to facilitate transit trade between Iran and Central Asian countries through its territory. It has temporarily waived formal banking rules for essential supplies to Iran and for Pakistan’s exports to Central Asian states, trying to bolster its own exports. This helps Iran build resilient transportation corridors through Pakistan and into Central Asia. These align with Pakistan’s geostrategic ambitions. For years, Islamabad has sought to make Pakistan a transit trade and energy corridor between the Middle East and Central Asia. Russia is another important plank in this Iranian strategy. Over time, Iran and Russia have moved to conduct bilateral financial settlements using a rial-ruble exchange, bypassing the SWIFT architecture. Though their bilateral trade stands at only $5bn, it avoids Western sanctions and banking restrictions. The 2025 Comprehensive Strategic Partnership Treaty between the two countries institutionalised what has been built over the previous two decades. The central element of this effort is the International North-South Transit Corridor (INSTC), established in 2000 by India, Russia and Iran as an alternative transportation corridor and trade route to the Suez Canal. The INSTC, a 7,200km multimodal network, gained significance for Russia after it launched the war on Ukraine in 2022. Once completed in 2030, the corridor will haul 30 million tons, resulting in $1.5bn in transit fees for Iran, the Eurasian Development Bank estimated. In addition, cargo already moves through St. Petersburg-Astrakhan-Anzali-Bandar Abbas via the Caspian Sea-river link, and through Kazakhstan and Turkmenistan by rail. The next step in the project will be to complete the Rasht-Astara railway. This would connect St. Petersburg, Russia, to Bandar-Abbas in Iran, avoiding American sanctions and ensuring a stable flow of goods. It is also diverse, with two land routes and one sea route, meaning disruptions can be mitigated by switching supply lines. The western path runs through Eastern Europe, while the Caspian and eastern routes run through Central Asia. China is another key player in this ongoing geopolitical game. The primary land-based transport links between the two countries are rail connections through Central Asia. These lines have become increasingly important since the start of Iran’s war with the US, and the American naval blockade only deepened their strategic value. The key rail link connects the Chinese cities of Yiwu and Xi’an to Iran via the Kazakhstan-Turkmenistan-Iran corridor, which first opened in 2014 and was extended in 2025 with Chinese freight links. The rail corridors provide a trade route that bypasses US sanctions and is more removed from geopolitical tensions. Pakistan also plays a key role in deepening the Iran-China relationship because of its strategic relationship with China and beca­use many of the transport links between Iran and China pass through Pakistan. Iranian finances are under pressure. With the Iranian oil reserve held afloat off Malaysia and China likely to run out this month, Iran faces a drastic curtailment of government revenues — probably amounting to 40 per cent of what had previously been expected in the annual budget, The Maritime Executive reported on October 8. With no oil or LNG flowing out of Iran on traditional routes, several alternative export routes to prop up its finances are being looked at closely by Tehran, the report also pointed out. Iran has two railway connections that could be valuable, including the route through Sarakhs across Turkmenistan to China, which carries some potential. Further, the Iranian national oil transmission network has a pipeline link to Zaghmarz on the Caspian Sea, but this was built as an import conduit for Russian oil being imported for refining to meet domestic fuel needs in northern Iran. Tankers on the Caspian are shallow draft and carry low volumes. However, there are impediments in the process, the report added. Neither Azerbaijan nor Kazakhstan are on friendly terms with Iran, so they would not be prepared to insert Iranian oil into their oil transmission systems, either from Kazakhstan through the Caspian Pipeline Consortium pipeline, or from Baku via the pipeline through Tbilisi to Ceyhan. Slowly and gradually, with the help of its neighbours, Iran is striving to wriggle out of the Western stranglehold. But this remains a painstakingly slow and arduous process and will take time to take a robust shape. The writer is an energy analyst and has delivered talks at the Department of Energy in Washington and the International Energy Agency. X: @rhusainsyed Published in Dawn, The Business and Finance Weekly, October 12th, 2026