A TFN Regional Trade & Transport Analysis

The latest tightening of U.S. sanctions against Iran should not be viewed merely as an Iran–United States confrontation. It is increasingly becoming a regional trade, banking and transport issue affecting the Gulf, China, South Asia, Central Asia, Russia and the wider Eurasian logistics system.

On 24 August 2026, the U.S. Department of the Treasury launched Operation Economic Outcast, describing it as a sustained campaign against Iran’s financial connections around the world. Treasury simultaneously expanded potential secondary-sanctions exposure into five critical areas: digital assets, technology, gold, aviation and shipping, while OFAC sanctioned nearly 60 entities, individuals and vessels across multiple jurisdictions.

Source: U.S. Department of the Treasury, 24 August 2026.

The significance is much greater than another round of sanctions against Iranian companies.

Washington is increasingly targeting the commercial infrastructure surrounding Iranian trade: foreign banks, trading companies, vessels, intermediaries and other entities that facilitate transactions.

The central question for regional trade therefore changes.

It is no longer simply:

How much Iranian trade will sanctions eliminate?

It is:

Where will the trade move, which financial and logistics centres will lose business, which corridors will attract diverted cargo, and which countries are best positioned to adapt?

Iran: The Epicentre of the Disruption

Iran remains the principal economic casualty.

Iranian President Masoud Pezeshkian said in August that the country’s foreign trade had contracted by approximately 35%, attributing the decline to sanctions and the effects of the U.S. blockade. He also reported annual inflation at approximately 66%.

These figures are statements by the Iranian government rather than independent TFN calculations, but they illustrate the severity of the pressure Tehran itself acknowledges.

Source: Reuters, 29 August 2026, reporting statements by President Masoud Pezeshkian.

The consequences, however, extend well beyond Iran.

A distinction needs to be made between prohibited trade and commercially stranded trade.

A commodity may not itself be prohibited, yet the transaction can become extremely difficult because the bank refuses the payment, the insurer declines the risk, the carrier refuses the cargo or an intermediary fears secondary sanctions.

For regional trade, this second category may become almost as important as formally prohibited commerce.

UAE: A Major Iran-Related Intermediary Comes Under Pressure

Dubai has historically provided an important commercial bridge between Iran and international markets through trading companies, re-export activity, banking, shipping, warehousing and payment arrangements.

That intermediary role now carries substantially greater risk.

A particularly important signal came on 28 August, when the U.S. Treasury’s Financial Crimes Enforcement Network — FinCEN — proposed revoking Banque Misr UAE’s correspondent banking access to U.S. financial institutions, describing the UAE operation as a financial institution of primary money-laundering concern.

This is significant because the enforcement mechanism extends beyond sanctioning an Iranian entity. It demonstrates Washington’s willingness to threaten the U.S. financial-system access of a third-country financial institution.

Source: U.S. Department of the Treasury, Financial Crimes Enforcement Network (FinCEN), 28 August 2026.

The implications extend beyond UAE–Iran bilateral trade because Dubai has historically served businesses elsewhere in Asia trading with Iran.

The UAE is unlikely to lose its position as one of the world’s leading logistics and trading centres. But its role as an intermediary for Iran-related commerce is becoming considerably more difficult.

TFN Assessment: High negative exposure in Iran-related financial and commercial intermediation.

India: How Sanctions Disrupt Otherwise Ordinary Trade

India provides one of the clearest examples of the wider regional effect.

According to Reuters, Indian exports to Iran have already fallen dramatically from approximately US$17 billion in 2018/19, while remaining trade is concentrated heavily in products such as rice, tea and pharmaceuticals.

During the first half of 2026 alone, India exported approximately US$383.11 million of rice and US$14.34 million of tea to Iran.

Source: Reuters, 24 August 2026, citing Indian trade data and industry sources.

These are particularly useful examples because rice and tea demonstrate that sanctions disruption does not have to begin with petroleum.

The difficulty can instead occur in:

payment → banking → insurance → intermediary trading → freight.

A significant amount of Indian Iran-bound business had traditionally relied upon Dubai for payment and logistics intermediation. Reuters reports that disruption to this arrangement is forcing exporters to consider alternatives, including Türkiye, while facing increased freight, insurance and transaction costs.

The underlying commodity may remain tradable, yet the commercial infrastructure supporting the transaction becomes increasingly difficult.

TFN Assessment: Negative for India–Iran trade, particularly businesses dependent upon third-country payment and logistics arrangements.

China: The Most Important External Variable

China is the largest external variable in determining how much Iranian trade can continue under intensified sanctions.

The scale of the relationship is substantial.

According to World Bank trade data cited by Reuters, Iranian exports to China were approximately US$22 billion in 2022, while Iranian imports from China were approximately US$15 billion.

More importantly for energy trade, shipping analytics firm Kpler estimated that China purchased more than 80% of Iran’s shipped oil in 2025.

Source: Reuters, January 2026, citing World Bank trade data and Kpler oil-shipping data.

China therefore cannot be considered merely another Iranian trading partner.

It is Iran’s most important external commercial lifeline.

But China’s position is complicated.

Beijing may reject unilateral U.S. sanctions politically while Chinese companies make very different commercial calculations.

A large Chinese bank with extensive dollar clearing and international operations has far more to lose from U.S. secondary sanctions than a smaller regional institution or specialised trading company.

The same applies to refiners, shipowners and commodity traders.

Greater use of RMB can reduce dependence upon dollar settlement, but RMB settlement does not itself eliminate secondary-sanctions exposure.

The emerging distinction may therefore become less about dollar versus RMB and more about:

internationally exposed institutions versus sanctions-tolerant institutions.

TFN Assessment: High exposure, but also the greatest economic capacity to adapt.

Iraq: One of the Most Vulnerable Neighbours

Iraq deserves particular attention because its vulnerability is substantially different from China’s.

According to official figures reported by Reuters, Iraq’s trade with Iran exceeded US$10 billion in 2025, driven significantly by Iranian exports of food and consumer goods.

Energy dependence adds another dimension. Iraqi energy officials told Reuters that Iraq pays Iran approximately US$4–5 billion annually for natural gas used in electricity generation.

Source: Reuters, 25 August 2026, citing official Iraqi/Iranian figures and Iraqi energy officials.

Yet Iraq also has extraordinary exposure to the U.S.-led financial system.

Reuters reports that Iraq has more than US$100 billion in reserves held in the United States, while Washington retains considerable influence over the dollar-based arrangements surrounding Iraqi oil revenues.

This gives Washington leverage that it does not possess to the same degree over China or Russia.

The transport impact is already visible as well.

The Hormuz disruption has pushed Iraq to develop alternative exports through Syria. Iraqi and Syrian officials told Reuters that Iraq was preparing to move approximately 50,000 barrels per day of crude through Syria, while Syria was working to revive a pipeline capable of carrying as much as 300,000 barrels per day toward the Mediterranean.

Source: Reuters, 19 June 2026.

This is an excellent example of geopolitical disruption physically changing transport geography.

TFN Assessment: Very high financial vulnerability, combined with urgent pressure to diversify transport routes.

The Strait of Hormuz: Where Sanctions Become a Global Transport Problem

The sanctions crisis cannot be separated from the physical disruption affecting the Strait of Hormuz.

According to the U.S. Energy Information Administration (EIA), approximately 20.9 million barrels per day of oil moved through Hormuz during the first half of 2025.

That represented approximately 20% of global petroleum-liquids consumption and around one-quarter of all globally traded maritime oil.

The available Saudi and UAE pipelines capable of bypassing Hormuz provide only about 4.7 million barrels per day of alternative capacity.

Source: U.S. Energy Information Administration, World Oil Transit Chokepoints.

The LNG exposure is similarly significant.

The EIA estimates that approximately 20% of global LNG trade passed through Hormuz in 2024. Qatar alone exported around 9.3 billion cubic feet per day of LNG through the strait.

Approximately 83% of Hormuz LNG flows went to Asian markets, with China, India and South Korea together accounting for 52% of the total.

Source: U.S. Energy Information Administration, June 2025.

The current disruption therefore cannot remain geographically confined to Iran.

It affects Gulf exporters, Asian importers, tanker availability, insurance, bunker costs and energy prices.

The effect has already reached Africa. Reuters reported that Asian diesel exports to Africa increased to a 4½-year high in August 2026, reaching approximately 1.8–2 million tonnes, as Asian refiners replaced disrupted Middle Eastern supply. Middle Eastern shipments fell to roughly 600,000–800,000 tonnes, their lowest level in nearly nine years.

Source: Reuters, 31 August 2026, citing shipping and market data.

This demonstrates how a Gulf disruption changes cargo flows thousands of kilometres away.

Iran/Gulf disruption → Middle Eastern supply reduction → Asian refinery response → increased India/China exports → altered tanker deployment → African supply substitution.

That is not simply an Iran problem.

It is a regional-to-global logistics shock.

Qatar and the Gulf: The Hidden Losers

The Gulf economies themselves should therefore not automatically be treated as beneficiaries of Iranian isolation.

Qatar provides the strongest example.

Reuters estimates that Qatar’s LNG exports fell approximately 96% during the first six months of the conflict, with only 18 cargoes shipped compared with 509 during the comparable period a year earlier.

The estimated lost LNG revenue was approximately US$24 billion.

Source: Reuters, 26 August 2026, based on shipping and market data.

This dramatically changes the winners-and-losers analysis.

A sanctions and security crisis centred on Iran can impose enormous losses upon Iran’s Gulf neighbours as well.

Saudi Arabia and the UAE possess more infrastructure capable of partially bypassing Hormuz, but even those alternatives cannot replace the strait’s full capacity.

The crisis is consequently encouraging Gulf states to accelerate investments in pipelines, Red Sea ports, UAE eastern ports, Fujairah and inland logistics infrastructure.

Source: Reuters, 28 August 2026.

TFN Assessment: Gulf economies face substantial short-term disruption but may accelerate long-term investment in Hormuz-bypass infrastructure.

Russia: Sanctions Strengthen the Logic of Alternative Connectivity

Russia presents a different case.

Much of its financial and commercial system already operates under extensive Western sanctions.

The additional deterrent effect of U.S. sanctions can therefore be lower for a Russian institution already separated from Western finance than for an internationally exposed bank in Dubai, Istanbul, Pakistan or China.

That increases the strategic logic behind the International North-South Transport Corridor (INSTC):

Russia → Caspian/Azerbaijan → Iran → Persian Gulf → India

The paradox is important.

Greater sanctions pressure can make the Iranian corridor more difficult for internationally connected companies while simultaneously making it more strategically important to Russia and Iran, because both countries have incentives to develop transport and settlement mechanisms outside Western-controlled systems.

TFN Assessment: Commercially constrained but strategically pushed toward deeper alternative Eurasian integration.

Kazakhstan: Geopolitical Diversification Becomes an Economic Asset

Kazakhstan is one of the strongest potential relative beneficiaries.

According to Kazakhstan’s Ministry of Transport, the country’s transit freight reached 36.9 million tonnes in 2025, an increase of 6.6% over 2024.

Source: Ministry of Transport, Republic of Kazakhstan.

The more strategically significant development is the Trans-Caspian International Transport Route, commonly known as the Middle Corridor.

According to official Kazakhstan government reporting, transport volumes on the route increased approximately sixfold over five years.

In 2025, overall route traffic increased by 62%, while container transportation increased 2.7 times to approximately 56,500 containers.

Existing Middle Corridor capacity is estimated by Kazakhstan at approximately 6 million tonnes and 182,000 containers annually, with plans to increase capacity toward 10 million tonnes annually by 2030.

Source: Government of Kazakhstan / official Middle Corridor reporting.

This corridor offers:

China → Kazakhstan → Caspian → Azerbaijan → Georgia/Türkiye → Europe

without entering Iran or Russia.

Sanctions therefore increase the commercial value of Kazakhstan’s ability to offer alternative geography.

Importantly, Kazakhstan is not abandoning the southern route. Its government simultaneously continues developing the North-South corridor toward Iran, the Persian Gulf, India and Pakistan.

This reinforces a central theme of the new regional environment:

The strongest countries may not choose one corridor. They will maintain several.

TFN Assessment: Strong relative beneficiary from corridor diversification and the growing strategic value of the Middle Corridor.

Uzbekistan: Diversification Becomes Infrastructure

Uzbekistan provides perhaps the clearest example of this strategy.

As a double-landlocked country, Uzbekistan should theoretically be extremely vulnerable to geopolitical transport disruption.

Instead, it has increasingly pursued multiple corridors simultaneously.

According to the Government of Uzbekistan, transit freight reached 15.3 million tonnes in 2025, an increase of 54% compared with 2021.

Yet Uzbekistan estimates that it currently captures only 1–2% of the China–Europe transit market.

Source: Government of Uzbekistan, 2026 transport and logistics development assessment.

The scale of the opportunity identified by Tashkent is considerable.

The Uzbek government estimates that attracting an additional 15–20 million tonnes of international transit cargo annually could generate:

US$400–600 million in additional annual revenue;

approximately US$3 billion in foreign investment into logistics centres and terminals;

and around 50,000 permanent jobs.

These are government projections rather than realised results and should be understood as such.

Source: Government of Uzbekistan.

More importantly, Uzbekistan is not betting its future on one geopolitical direction.

Its options include:

China;

Kazakhstan and the Middle Corridor;

Russia;

Iran;

Afghanistan–Iran;

and potentially:

Afghanistan → Pakistan → Karachi/Gwadar.

The Uzbek government itself identifies Karachi and Gwadar as providing potential access to the Indian Ocean and the South Asian market.

The lesson is powerful:

For a landlocked country, corridor diversification is itself strategic infrastructure.

TFN Assessment: Relative beneficiary because of increasingly deliberate multi-corridor diversification.

Azerbaijan, Georgia and Türkiye: The Western Bridge

The same forces increase the strategic importance of Azerbaijan and Georgia.

Cargo travelling:

China/Central Asia → Kazakhstan → Caspian → Azerbaijan → Georgia → Türkiye → Europe

avoids both Iran and Russia.

Their advantage does not arise because sanctions automatically create more international trade.

It arises because sanctions increase the relative value of politically and financially accessible routes.

Türkiye occupies a more complicated position.

It can benefit from diverted commercial and transit activity, including business displaced from traditional UAE–Iran arrangements.

But increased involvement in Iran-related transactions simultaneously raises the sanctions exposure of Turkish banks, traders and transport companies.

TFN Assessment: Azerbaijan and Georgia are potential transit beneficiaries; Türkiye combines significant commercial opportunity with higher compliance exposure.

Oman: Geography Gains New Importance

Oman deserves greater attention than its size might initially suggest.

Its location outside the Strait of Hormuz, its ports and its longstanding commercial and diplomatic relationship with Iran give it potential value as an alternative Gulf logistics node.

However, Oman cannot simply replace Dubai’s enormous banking, aviation, re-export and trading ecosystem.

Any gain is therefore more likely to occur through selected maritime, port and logistics activity rather than wholesale migration of Iranian commerce.

TFN Assessment: Potential niche beneficiary from changing Gulf logistics patterns.

Pakistan: High Risk, but Potentially High Strategic Opportunity

Pakistan is one of the most difficult countries to classify.

On 5 August 2026, Pakistan and Iran concluded the 10th Session of their Joint Trade Committee with a commitment to work toward a shared target of US$10 billion in annual bilateral trade.

The two governments also agreed to advance a proposed Free Trade Agreement, expand barter trade, strengthen business-to-business links, activate joint border markets and improve customs coordination, transport, logistics and border infrastructure.

Source: Government of Pakistan, Press Information Department, 5 August 2026.

The US$10 billion figure is therefore a policy target, not current bilateral trade.

The latest sanctions environment makes achieving that target considerably more complicated.

Pakistan’s physical border with Iran is not necessarily the greatest obstacle.

Cargo can move through the land border.

The difficult questions increasingly concern:

Who receives payment?

Which bank processes it?

Which currency is used?

Who is the Iranian counterparty?

Is the commodity or entity subject to sanctions?

Will the insurer, carrier and intermediary accept the transaction?

Pakistan therefore faces genuine downside risk in bilateral Iran commerce.

But there is another side.

If Central Asian economies increasingly seek multiple southern gateways, Pakistan potentially offers:

Central Asia → Afghanistan → Pakistan → Karachi/Gwadar → Indian Ocean.

The Government of Uzbekistan itself now identifies Karachi and Gwadar as potential gateways toward the Indian Ocean and the roughly two-billion-person South Asian market.

Pakistan’s problem is therefore not geography.

It is commercial reliability.

Border closures with Afghanistan, security, customs unpredictability, banking constraints and inconsistent transit procedures can quickly eliminate the advantage of a geographically shorter route.

TFN Assessment: High sanctions-related risk in Iran trade, but potentially substantial upside from regional corridor diversification if Pakistan can offer dependable transit.

Who Gains and Who Loses?

The evidence does not support a simplistic ranking.

Iran is the principal direct loser. Its government reports foreign trade down approximately 35%, while sanctions increasingly attack the financial and logistics infrastructure supporting external commerce.

Qatar and other Gulf exporters are major collateral losers from Hormuz disruption. Qatar’s extraordinary LNG-export contraction demonstrates that an Iran-centred crisis can inflict enormous costs on neighbouring economies.

UAE’s Iran-related intermediary business faces significant pressure, although the UAE’s wider position as a global logistics centre remains strong.

Iraq is among the most financially vulnerable countries because it combines more than US$10 billion of Iran trade with substantial dependence upon U.S.-linked dollar architecture.

India faces declining Iran-related trade and higher transaction costs, despite much of its remaining trade consisting of ordinary products such as rice, tea and pharmaceuticals.

China faces the largest external exposure but also possesses the greatest economic capacity to adapt.

Russia suffers continued commercial isolation but gains strategic motivation to deepen alternative connectivity with Iran.

Türkiye and Oman may capture selected diverted trade, although increased Iran-related activity brings greater sanctions scrutiny.

Kazakhstan, Azerbaijan and Georgia gain strategic importance through the Middle Corridor.

Uzbekistan benefits from deliberately maintaining several competing corridors rather than becoming dependent upon one.

And Pakistan stands between risk and opportunity: its bilateral Iran ambitions become more difficult, while its potential strategic value as an alternative Central Asian maritime gateway increases.

Trade Does Not Simply Disappear — It Searches for Another Route

This is the central transport lesson.

Some trade will disappear.

Some will change supplier.

Some will change currency.

Some will change banks.

Some will move through different trading companies.

Some cargo will shift away from Gulf routes.

Some will move toward the Middle Corridor.

Russia and Iran will attempt to strengthen alternative systems.

Central Asian economies will diversify routes.

And some cargo may eventually seek Pakistan.

The evidence is already visible.

Asian diesel is replacing Middle Eastern supply in Africa.

Iraq is developing Mediterranean export routes through Syria.

Kazakhstan is expanding Trans-Caspian capacity.

Uzbekistan is actively seeking additional corridors toward both Europe and the Indian Ocean.

Gulf states are investing in infrastructure designed to reduce dependence upon Hormuz.

These are not theoretical geopolitical scenarios.

They are physical changes in trade and transport behaviour.

Conclusion: Reliability Is Becoming More Valuable Than Distance

The latest sanctions against Iran are accelerating a larger restructuring of Eurasian trade.

A geographically shorter corridor is no longer necessarily the commercially cheapest corridor.

Its real cost increasingly includes:

banking risk + sanctions compliance + insurance + border reliability + maritime security + customs efficiency + political continuity.

This changes the meaning of transport competitiveness.

Kazakhstan’s Middle Corridor becomes more valuable not because Kazakhstan moved closer to Europe, but because alternative corridors became riskier.

Uzbekistan’s strength lies increasingly in having multiple exits.

Iraq is developing alternatives because dependence on one maritime gateway became dangerous.

Gulf countries are investing in infrastructure that can bypass Hormuz.

China and Russia are being pushed toward financial and transport arrangements less dependent upon Western systems.

Pakistan possesses potentially valuable geography, but geography alone does not capture transit cargo.

The countries best positioned in the emerging Eurasian trade map will therefore be those capable of providing:

reliable borders, multiple transport corridors, workable banking, efficient customs, competitive ports, predictable regulation and continuity of cargo movement.

For Central Asia, corridor diversification is becoming a form of economic security.

For Pakistan, the lesson is more demanding:

Geography creates the opportunity. Reliability captures the cargo.

The real winners and losers of the new sanctions environment may therefore ultimately be determined not only in Washington or Tehran, but at banks, ports, border crossings, rail terminals and logistics corridors across Eurasia.

Data & Source Note

This analysis prioritises primary and official sources, including the U.S. Department of the Treasury/OFAC/FinCEN, U.S. Energy Information Administration, Government of Pakistan, Government of Kazakhstan and Government of Uzbekistan.

Recent developments for which official consolidated statistics are not yet available are supported by Reuters, including reporting based on government statistics, industry interviews, energy-market information and maritime/shipping data.

Government targets and projections — such as Pakistan–Iran’s US$10 billion trade objective and Uzbekistan’s projected 15–20 million tonnes of additional transit potential — are explicitly identified as targets or estimates rather than realised results.

Where corridor statistics use differing geographical definitions or methodologies, TFN does not treat them as automatically comparable.

The underlying figures belong to the cited institutions. The assessment of their implications for regional trade and transport is TFN’s analysis.

Trade Facilitation Network (TFN)
Regional Trade & Transport Analysis
September 2026