From banks to blockchains: US opens new front in Iran sanctions

Recent reports by state-linked, reformist and business-affiliated institutions suggest growing concern not only about economic hardship but also about its long-term social consequences.

One of the most striking indicators comes from Eghtesad News, which reported in May that Iran's middle class, estimated at 65% to 70% of the population at the beginning of the 2010s, now accounts for only around half of the country's population.

While the recent conflict involving Israel and the United States has intensified economic pressures, many analysts argue that the underlying deterioration long predates the war.

A separate study highlighted by the state-owned Mehr News Agency points to mounting pressure on small and medium-sized enterprises (SMEs), which remain among the largest employers of working- and lower-middle-class Iranians.

According to the Iran Chamber of Commerce Research Center, macroeconomic pressures are "systematically destroying" SMEs while leaving large state-backed entities comparatively insulated.

Unable to access affordable financing and struggling with rising costs, many businesses have resorted to what the report describes as "hidden layoffs"—reducing working hours, delaying wage payments and replacing long-term contracts with temporary arrangements.

The result, according to the report, is a gradual shift of workers out of the formal economy and into more precarious forms of employment.

That trend is explored in a separate analysis published by the reformist website Rouydad24, which traces the growth of informal labor to the sanctions shock that followed intensified international pressure in 2012.

Industries dependent on foreign trade and international supply chains increasingly turned to informal employment arrangements, hiring workers without insurance coverage or social-security protections.

According to the report, the probability of workers entering the informal economy rose by roughly 9% following the sanctions shock, with the effects becoming more pronounced over time.

While the informal sector helped absorb displaced workers and prevented a sharper rise in unemployment, the long-term costs have been significant. Analysts cited by Rouydad24 point to lower productivity, weaker tax collection and growing strain on pension funds as insurance contributions decline.

Low-skilled and less-educated workers have experienced the highest rates of displacement into insecure employment, while rural communities have seen some of the sharpest reductions in working hours and income stability.

What began as a deterioration in working-class security has increasingly spread into the middle class, leading to housing insecurity, declining consumption, shrinking access to cultural activities and growing economic pessimism.

Property prices and rents have risen far faster than incomes, forcing many households into smaller homes, peripheral neighborhoods or satellite towns on the outskirts of major cities.

Economists warn that such displacement carries broader social consequences, weakening community ties, increasing commuting times and reducing overall quality of life.

Inflation has also altered household consumption patterns. Reports increasingly describe families reducing spending on meat, dairy products and other staples, while expenditures on books, cinema, travel, restaurants and other cultural activities have become harder to sustain.

The cumulative effect is a gradual narrowing of the economic and social space traditionally associated with middle-class life.

These assessments stand in sharp contrast to recent remarks by Vice President Jafar Ghaempanah, who said that 82% of Iranians were satisfied with market management and the availability of essential goods during the war.

His comments came as government officials simultaneously acknowledged that authorities were unable to increase the purchasing power of subsidized coupons used to buy basic necessities.

For many economists, the central concern extends beyond living standards. Historically, Iran's middle class has played an important role in education, entrepreneurship, professional development and civic participation.

As economic pressures push more households downward, analysts increasingly warn of declining social mobility, weaker social trust and a growing risk of future instability.

The warnings emerging from Iranian experts converge on a similar point: the country's economic difficulties are no longer confined to the poorest segments of society and are reshaping the social foundations on which long-term stability depends.

The Iraqi port is now being used to move some Iran-bound cargo, including cars, after shipments are first transferred from ports in the United Arab Emirates on vessels flying non-Iranian flags, sources with knowledge of the matter Iran International.

The shift adds a new layer to Iran’s effort to keep trade moving through indirect routes after the US blockade, which began on April 13, closed the main passages in the Strait of Hormuz to Iranian ships and vessels linked to the Islamic Republic.

Iran International previously reported that the small Omani port of Khasab, on the Musandam Peninsula near the mouth of the Strait of Hormuz, had become one of the main alternatives for moving goods into Iran.

Cargoes that once moved through standard UAE-Iran channels have been transferred from Emirati ports to Khasab, then loaded onto Iranian vessels bound for ports on Iran’s southern coast.

But trade sources said the route has become slower in recent weeks as demand has risen.

The number of vessels gathering in Khasab has increased, while the port’s limited capacity has made loading and transfers more time-consuming and more expensive than in the first days after the ceasefire, the sources said.

Oman, which had previously imposed limited restrictions or charges on some cargoes, has also introduced new costs for certain goods in recent weeks.

One trade source said some shipments, including cars, are now subject to charges based on the value of the goods.

Against that backdrop, Umm Qasr, Iraq’s main Persian Gulf port, has become a complementary route.

How the new route works

Sources told Iran International that cars have been among the cargoes moved from Umm Qasr toward Iran. There is no confirmed information on whether other categories of goods are being transferred through the same route.

In this method, cars or other Iran-bound cargo are first shipped from docks in the UAE, including Dubai, to Umm Qasr under flags other than Iran’s.

From there, the cargo can move into Iran by land or by water.

On the land route, shipments travel from Umm Qasr to Basra, then to Iran's Shalamcheh border crossing, before reaching Khorramshahr and other destinations in Iran.

On the water route, vessels heading for Khorramshahr must enter the Shatt al-Arab, known in Iran as the Arvand River, and continue from there to Iranian piers.

Some cargoes can also move from Umm Qasr through Khor Abdullah toward southern Iranian ports, including Bandar Lengeh, according to the information obtained by Iran International.

Khasab, however, remains attractive to many traders despite congestion and higher costs.

One reason is that goods can reach Oman by both land and sea.

Some shipments can be moved from the UAE into Oman overland, and trade sources say monitoring of certain cargoes traveling by land to Oman is less strict than on fully maritime routes.

The Umm Qasr route is different.

Cargoes moving from the UAE to the Iraqi port generally have to be loaded at official docks in Dubai or other Emirati ports, where trailers and containers pass through scanning systems and face more stringent controls.

Umm Qasr’s location still makes it useful for Iran’s trade network.

The port lies about 60 kilometers south of Basra and is one of Iraq’s most important Gulf terminals. A significant share of Iraq’s imports of basic goods, including grain and sugar, moves through the port, which connects Iraq to Gulf trade routes.

Its proximity to Basra, the Shalamcheh crossing and Iran’s Khuzestan province has made it a practical option for shipments headed toward southwestern Iran.

Iranian local officials had previously referred to the use of this route.

Javad Kazem-Nasab Al-Baji, deputy governor of Khuzestan for economic affairs, said in May during a meeting with the head of Iran’s customs administration that agreements had been reached for the entry of basic goods and relief items through Iraq’s Umm Qasr port.

But the route also carries risks. The IRGC Navy recently targeted a commercial vessel at Umm Qasr, calling it “American-Israeli.” The IRGC said the attack was carried out in retaliation for a US strike on the Iranian vessel Lian Star.

The incident showed that even alternative routes through Iraq are not insulated from the military and security tensions surrounding the blockade.

For traders and transport intermediaries, however, pressure on Iran’s traditional maritime routes has made even more complicated and risky options part of the calculation.

Iran's imports of services surged to a record $25.5 billion in 2025 while merchandise imports fell sharply, according to newly released data from the Central Bank of Iran, highlighting a significant shift in the country's trade structure.

Services imports accounted for roughly one-quarter of Iran's total imports during the year, an unusually high share for an economy traditionally dominated by trade in physical goods.

At the same time, Iran's exports of services declined, pushing the country's services trade deficit to a record $17 billion. The deficit was 52% higher than in 2024 and roughly three times larger than in 2020.

Separate central bank data on foreign trade in goods point to an equally dramatic contraction in merchandise trade.

Read the full article here.

Services imports accounted for roughly one-quarter of Iran's total imports during the year, an unusually high share for an economy traditionally dominated by trade in physical goods.

At the same time, Iran's exports of services declined, pushing the country's services trade deficit to a record $17 billion. The deficit was 52% higher than in 2024 and roughly three times larger than in 2020.

Separate central bank data on foreign trade in goods point to an equally dramatic contraction in merchandise trade.

Iran imported approximately $49 billion worth of goods during the fiscal year ending March 21, a decline of 32% compared with the previous year. Non-oil exports also weakened considerably, falling 22% year-on-year to about $45 billion.

The figures suggest Iran's trade structure is undergoing a significant transformation, with services playing an increasingly prominent role while merchandise trade contracts.

The reasons behind the rapid rise in services imports remain unclear.

Iran's services imports primarily include transportation and logistics services, insurance related to foreign trade, financial transaction services, engineering and construction projects, technology purchases and other professional services.

One possible explanation emerged in a Wall Street Journal report published last October, which suggested that part of Iran's oil exports to China were being exchanged for services rather than cash payments or traditional oil-for-goods arrangements.

China is effectively the sole buyer of Iranian crude oil. According to estimates by the Organization of the Petroleum Exporting Countries (OPEC), Iran's crude oil exports were worth approximately $44 billion last year before accounting for sanctions-related discounts and the costs of circumventing US restrictions.

While the central bank data do not reveal the source of the imported services, the figures are consistent with the possibility that a growing share of Iran's oil revenues is being settled through services rather than conventional financial transfers or merchandise imports.

Another factor attracting attention is the role of the Islamic Revolutionary Guard Corps (IRGC) in both oil exports and major infrastructure projects.

Under Iran's previous budget law, the IRGC was tasked with exporting 700,000 barrels of crude oil per day, roughly half of the country's actual crude exports. The organization is also one of Iran's largest contractors in infrastructure and construction.

However, the central bank data provide no direct evidence regarding the destination of oil revenues or the beneficiaries of imported services.

The outlook for the current fiscal year is even more uncertain amid the conflict involving the United States and Israel.

Trade flows with the United Arab Emirates, Iran's largest supplier of goods, have reportedly been disrupted over the past three months.

Meanwhile, Chinese customs data show Iran and China recorded only about $400 million in bilateral non-oil trade during March and April combined, roughly one-fifth of the level recorded during the same period a year earlier.

Whether the shift toward services reflects changes in sanctions-evasion mechanisms, evolving arrangements with China, or broader economic weakness remains an open question. What is clear from the latest data is that Iran's trade profile is changing in ways not seen in recent years.

By suspending talks with Washington over Israel's campaign in Lebanon, Tehran has raised the stakes of postwar diplomacy and posed a critical question: is it successfully increasing its leverage, or overplaying its hand?

President Donald Trump announced Monday that Israel and Hezbollah had agreed to halt attacks following a flurry of calls with Israeli Prime Minister Benjamin Netanyahu and intermediaries linked to the Iranian-backed group.

Hours earlier, however, Iran suspended talks with Washington, citing Israel's military operations in Lebanon and threatening to open new fronts in the conflict.

The diplomatic turmoil comes as Israel carries out its deepest military operations in Lebanon in more than two decades.

Tehran argues the operations violate the broader ceasefire framework established after the US-Iran war, while critics counter that Iran helped create the crisis by insisting Lebanon be included in ceasefire discussions and then backing Hezbollah attacks that prompted Israel's response.

Read the full article here.