The United States and Israel’s bombing campaign has left much of Iran’s infrastructure and industries in tatters, disrupting domestic production and hiking prices for basic food items.
A US sea blockade has intensified the economic pressure on Iran, hampering its trade through the Strait of Hormuz, a key maritime chokepoint that has been effectively closed since the war began on February 28.
In response, Tehran has turned to alternative routes, trucking goods from neighboring Pakistan and Turkey as well as shipping cargo from Russia, an ally, through the Caspian Sea. Iran is also looking at sending oil by rail to China, a key trading partner.
Steve H. Hanke, a professor of applied economics at Baltimore's Johns Hopkins University, said alternative routes can supply the Iranian economy with consumer goods, food, and industrial materials. But they “cannot replace a maritime container economy one-for-one.”
“Trucking is more expensive and Caspian throughput is constrained by port and fleet capacity,” said Hanke, a former economic adviser to the administration of US President Ronald Reagan. “Expect higher landed costs and higher inflation in tradeables but not the economic implosion some have advertised.”
Trump claimed in late April that Iran’s “whole oil infrastructure is going to explode” because the US barricade was preventing Tehran from exporting its oil, the country’s economic lifeline. But experts are skeptical that the blockade of the Strait of Hormuz will force Tehran to capitulate or sign a peace deal on US terms.
For their part, Iranian officials have said the US embargo has not impacted the country's ability to source basic goods and food, pointing to strong domestic production and alternative import routes.
“Despite the US naval blockade, we have no problem in supplying basic goods and food because, due to the size of the country, it is possible to import from different borders," Agriculture Minister Gholamreza Nouri said on April 21.
Rosemary Kelanic, director of the Middle East Program at Defense Priorities, a Washington-based think tank, said Iran’s geography has lessened the blow of the US naval blockade.
A country of some 90-million people, Iran has nearly 6,000 kilometers of land borders with seven countries as well as a 700-kilometer-long coastline along the Caspian Sea, connecting it to Central Asia and Russia.
“Measures like trucking in goods from neighboring countries can compensate for blockade-related disruptions, though the compensation may not be one-for-one -- trade volumes might be lower, transit costs will be somewhat higher, and the exact mix of goods might change,” she said. “But there are plenty of ways a war economy can substitute like-goods for one another.”
“The possibilities for the Iranians to ‘MacGyver’ their way around Trump's blockade are endless because the country has thousands of miles of land border to work with,” Kelanic added.
Under international law, blockades are barred from impeding the flow of foodstuffs and medicine. It is unclear if the United States is blocking shipments of civilian goods to Iran inadvertently or by policy. RFE/RL requested comments from the White House.
Land Routes
Iranian lawmaker Ebrahim Najafi said last month that the country was using land routes with Pakistan, Turkey, Armenia, and Azerbaijan as well as the Caspian Sea to import goods.
Pakistan on April 25 opened its ports to third-country cargo bound for Iran. The move established six land routes for goods to be transported from the ports of Gwadar, Karachi, and Port Qasim to the Iranian border. The routes will be mainly used to import rice, meat, and baby formula.
Since the US blockade was imposed on April 13, around 3,000 containers destined for Iran have been stuck in Pakistani ports.
The Kapikoy-Razi crossing, meanwhile, connects Iran to Turkey. Linking West Asia to Europe, the transit corridor facilitates major commercial trade. It is unclear if Iran has increased its imports through the corridor since the blockade was imposed.
Russia has reactivated shipments via the Caspian Sea to Bandar Anzali, an Iranian port on the world's largest inland sea.
Bandar Anzali was targeted by Israeli air strikes on March 18, causing damage. At the time, Israel said it had struck targets at an Iranian Navy port and base facilities where dozens of military vessels, including missile ships and guard boats, were stationed.
Media reports have suggested that Moscow and Tehran are using the Caspian Sea to smuggle sanctioned oil and weapons. But Iran and Russia also exchange food goods via the route. Grain trade between Iran and Russia was halted immediately following the Israeli attack but resumed afterward.
Kpler, a commodities and shipping analytics company, said around a dozen ships from Russia, Kazakhstan, and Turkmenistan carrying grain, corn, and sunflower oil have arrived in Iran’s Caspian ports since mid-April.
Crude By Rail
Besides securing new import routes, Iran is also looking at ways to export goods, especially its oil.
The US blockade has significantly disrupted Iran's seaborne oil exports but has not stopped them entirely. Some Iran-linked tankers have managed to bypass the barricade, according to cargo-tracking group Vortexa and maritime data company Lloyd's List.
The Islamic republic should be able to ride out the blockade for another two months, experts said, pointing to the up to 130 million barrels of Iranian oil that were already out at sea before the barricade came into effect.
Still, Iran is turning to alternatives, including exporting oil by rail to China, which buys around 90 percent of Iran’s supplies, according to Hamid Hosseini, spokesman for Iran’s oil exporters union.
Rail infrastructure connects Iran to the Chinese cities of Yiwu and Xi’an. The Kazakhstan-Turkmenistan-Iran corridor opened in 2014 and was extended by China's 10,400-kilometer freight link completed in 2025.
“Rail can move strategically meaningful volumes, but it cannot, in the near term, substitute for tankers at scale,” said Hanke of Johns Hopkins University.
“Its value is partly logistical and partly political: it operates entirely outside any waterway a Western navy can patrol, and entirely outside the dollar payments system, since China has settled Iranian oil in yuan since 2012.”
Kelanic of Defense Priorities said transporting oil by sea is more efficient, but there were ways Iran could ship oil overland to circumvent the US embargo.
“Iran can also truck oil by highway, for example, as Iraq has done, avoiding the Strait of Hormuz by trucking oil overland through Syria to the Mediterranean Sea,” she said.
“In the short run, the volumes will be smaller, constrained by the availability of tanker trucks. But recipient countries or third countries could provide additional trucks, perhaps as a political favor to Iran, or simply because it would be in their interest to increase their own access to oil in a tight market.”
