Iran's closure of the Strait of Hormuz appears to have dealt far greater damage to its own trade with China than to Beijing's commerce with the rest of the Persian Gulf, according to newly released Chinese customs data.
Between March and June 2026, Iran's non-oil trade with China totaled just $830 million, down from $3.3 billion during the same period last year—a decline of roughly 75%.
Kpler shipping data reviewed by Iran International also point to a sharp decline in Iranian oil exports to China.
Average daily unloadings at Chinese ports fell from 1.74 million barrels per day in April to around 550,000 barrels per day in the first half of July.
Together, the figures suggest the Strait of Hormuz closure has dealt a severe blow to Iran's economic ties with its largest trading partner.
China remains the only major buyer of sanctioned Iranian crude and was by far Iran's most important commercial partner in 2025.
The disruption has also sharply increased transportation costs. According to the head of logistics at Iran's Trade Promotion Organization, shipping a container from China to Iran now costs $8,000–$9,000, up from $2,500–$3,500before the conflict.
Transporting goods through Central Asian rail corridors has become even more expensive.
Iran hit harder than regional rivals
Although trade between China and other Persian Gulf states also declined after the Strait closure, the contraction was far less severe than in Iran's case.
Chinese customs data show Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates recorded a combined $109 billion in bilateral trade with China during the first half of 2026, a 29% decline from a year earlier.
By contrast, total trade between Iran and China during the same six-month period fell 59%.
Trade between China and Oman proved even more resilient, remaining virtually unchanged at around $16 billion during the first half of the year.
The figures indicate that Iran has borne a disproportionately large share of the commercial costs associated with disrupting one of the world's most important shipping lanes.
Broader trade slowdown
The impact extends well beyond China.
Last year, Iran’s Arab neighbours accounted for roughly 51% of Iran's total non-oil trade. Since March, trade between Iran and all of those countries except Iraq has effectively come to a halt.
Iran itself has stopped publishing monthly foreign trade statistics since the regional war began, leaving customs data from trading partners among the few remaining indicators of the country's external commerce.
Data from other major economies point in the same direction.
According to Eurostat, trade between Iran and the European Union fell by more than half during the first three months of the conflict, dropping below €430 million.
India offered one notable exception. A one-month US sanctions waiver allowed Indian refiners to receive two cargoes of Iranian crude in May, lifting India's imports from Iran by more than 340% to about $950 million during the first five months of the year.
Even so, India's exports to Iran fell 17% to $470 million, reflecting weaker non-oil trade.
Official Turkish data painted a steadier picture. Despite a doubling of Iranian natural gas exports, overall trade between Iran and Turkey remained broadly unchanged at around $1.9 billion during the first half of the year.
The Chinese customs figures, shipping data and trade statistics from Europe suggest that while the Strait of Hormuz crisis has disrupted commerce across the region, Iran has so far paid a markedly higher commercial price than many of the countries it sought to pressure.
Russia’s turn to imported gasoline after Ukrainian attacks damaged its refineries is adding demand to a tight Asian fuel market, creating a potential new complication for Iran as it struggles to cover a daily shortfall of about 30 million liters.
Iran currently produces about 105 million liters of gasoline a day while consuming approximately 135 million liters, according to Reza Sepahvand, a member of parliament’s energy committee. He said in May that wartime damage had reduced domestic production while fuel imports had also declined.
Before the US-led war that started on February 28, Iran covered part of its fuel deficit through imports and barter arrangements, particularly with traders in the United Arab Emirates.
Those regular seaborne channels have been largely cut off by the ongoing US naval blockade, which bars maritime traffic entering or leaving Iranian ports. Tehran has diverted some trade through Oman’s Khasab port and Iraq’s Umm Qasr, but trade sources say those indirect routes are slower, more expensive and have far less capacity than conventional shipping, making them ill-suited to replacing large fuel deliveries.
The disruption has left Iran more dependent on a narrower pool of non-Western suppliers and alternative trading networks. That pool is now facing additional demand from Russia, which has turned to gasoline imports after Ukrainian drone strikes damaged its refining sector and disrupted domestic supplies.
Reuters reported that Russia was seeking as much as 400,000 metric tons of gasoline a month from countries including India, Belarus and Kazakhstan. At least 60,000 tons had been shipped from India to Russia by early July.
Where Russian and Iranian demand overlaps
Not all those purchases directly compete with Iran. Fuel from Belarus and Kazakhstan largely reaches Russia through established regional and overland networks that Tehran does not normally use.
The more relevant overlap is in India and the wider seaborne fuel market, where Russian purchases could increase competition for available cargoes, tankers, insurance and financial intermediaries.
Miad Maleki, a senior fellow at the Foundation for Defense of Democracies and a former senior sanctions strategist at the US Treasury, told Iran International that Russia and Iran were increasingly looking to overlapping parts of the non-Western energy market.
“Both countries are now drawing from the same pool of non-Western refiners with spare export capacity, but Russia is a far bigger buyer,” Maleki said.
India has sharply increased its exports of gasoline and other refined fuels in response to international shortages. Its exports of light and middle distillates were expected to reach 1.55 million barrels per day in July, almost double the 866,000 barrels per day recorded in May, Reuters reported, citing data from the commodities intelligence firm Kpler.
But the additional Indian supply has not fully relieved pressure on the Asian market. Kpler estimated that Asian imports of light and middle distillates would reach 5.8 million barrels per day in July, about 18% below levels seen before the latest conflict-related disruptions.
The Financial Times reported that a 42,000-ton gasoline cargo originating at India’s Vadinar refinery was scheduled to arrive at a Russian terminal. More than 90% of the crude processed at Vadinar this year had come from Russia, according to Kpler, effectively allowing Russian oil to be refined in India and shipped back as gasoline.
For Iran, the concern is not that Russia has already taken cargoes intended for Tehran. There is no public evidence that Moscow has directly displaced a specific Iranian purchase.
Rather, Russia is adding substantial demand to a market in which Iran already faces limited suppliers, restricted banking access and higher transportation and insurance costs.
Why Tehran has fewer options
Iran’s reliance on imported fuel had been increasing even before the war. A confidential Oil Ministry report obtained by Iran International showed that the country imported nearly 5 billion liters of gasoline and diesel combined in the Iranian year ending in March 2025, twice the volume recorded a year earlier.
The figure covers both gasoline and diesel and does not establish the volume of gasoline imports alone. But it illustrates Iran’s growing dependence on foreign fuel as domestic consumption outpaces refinery production.
The report said Iran had increasingly relied on barter arrangements because sanctions restricted its access to international banking and conventional payment systems. Tehran exchanged fuel oil for gasoline and diesel, particularly through traders operating in the United Arab Emirates.
Russia’s greater purchasing power and established commercial relationships could give it an advantage where the two countries’ needs overlap.
“Russia’s economy and import bill dwarf Iran’s, giving it far more purchasing power and better logistics networks with India, Kazakhstan and Belarus,” Maleki said.
Any resulting pressure inside Iran would probably not appear first through an official increase in gasoline prices. Fuel is heavily subsidized, and the government has historically been reluctant to raise prices because of the risk of public anger.
Instead, a prolonged shortage could lead to tighter quotas, uneven distribution, longer lines at filling stations and greater reliance on unofficial markets.
Drivers in several parts of Iran were already reporting tighter rationing, long queues and gasoline being sold outside the official distribution system at sharply higher prices in May, according to Iran International.
Russia’s gasoline imports do not mean Iran will lose access to foreign fuel. But they introduce another large buyer into parts of the market Tehran relies on at a time when Iran is already struggling with damaged production capacity, rising consumption and restricted access to international trade.
President Donald Trump vowed Tuesday to strike Iran’s Pickaxe Mountain, but experts say the deeply buried nuclear facility, potentially central to Tehran’s efforts to restore enrichment, may be far harder to disable than his warning suggests.
“The new site that they’re talking about, they’re trying to possibly reconstitute a site, we’ll hit that site,” Trump told reporters Tuesday during an Oval Office meeting with Lebanese President Joseph Aoun.
“Any site where they’re even thinking about nuclear, we’ll be hitting it very, very powerfully.”
Hours after the US president’s warning, Iran’s joint military command warned that any US attack on Iran’s nuclear or other sensitive sites would widen the regional war, according to state media.
US interests and those of countries supporting Washington would face a “powerful assault” by Iran’s armed forces, Khatam al-Anbiya Central Headquarters said.
Raja News, a hardline Tehran outlet, went further, calling for Iran to publish a list of vital infrastructure across the region, particularly in the United Arab Emirates, and strike the targets if the United States attacks Pickaxe Mountain.
The outlet said Iran should not wait for an attack before responding and urged officials to present a practical plan for withdrawing from the Nuclear Non-Proliferation Treaty.
Trump’s warning followed an Israeli intelligence assessment, first reported by The Wall Street Journal, that Iran moved thousands of uranium-enrichment centrifuges into Pickaxe Mountain last fall.
Israel shared the assessment with Washington, but the allegation has not been independently verified, and neither country has publicly disclosed the evidence supporting it.
If accurate, the reported transfer would make Pickaxe one of the most strategically important surviving sites in Iran’s nuclear program.
Centrifuges enrich uranium by spinning uranium hexafluoride gas at extremely high speeds and are essential for producing nuclear fuel or weapons-grade material.
“When you assemble centrifuges like that, the next step is to put them in an enrichment plant,” David Albright, president of the Institute for Science and International Security, told Iran International.
Iran began building Pickaxe Mountain after an explosion in 2020 damaged an above-ground advanced centrifuge assembly facility at Natanz in an attack widely attributed to Israel. Tehran said the underground complex would replace the damaged assembly plant.
Satellite imagery has shown years of continued construction. Albright said the underground complex appears significantly larger than would be required for centrifuge assembly alone, leading his institute to assess that it could eventually also house a uranium-enrichment plant.
If centrifuges are being stored there, experts say the facility could provide Tehran with a pathway to restore uranium enrichment despite months of US and Israeli military strikes.
A difficult target
Its depth also makes Pickaxe one of Iran’s most difficult nuclear facilities to attack.
Andrea Stricker, deputy director of the Foundation for Defense of Democracies’ Nonproliferation Program, said the facility is estimated to sit roughly 300 to 450 feet beneath a granite mountain, potentially placing it beyond the reach of conventional US bunker-buster bombs.
“Essentially, Pickaxe is where Iran could reconstitute a nuclear weapons pathway,” Stricker told Iran International.
Rather than attempting to penetrate the mountain itself, experts say military planners could seek to disable the facility by targeting its tunnel entrances, ventilation systems and electrical infrastructure.
“You don’t look to get a bunker buster to pass through the mountain. I mean, that’s just not possible,” Albright said.
But he added that the complex was “not immune from destruction or shutting it down.”
“If they have centrifuges in there and they can’t use them, then that is a step forward to try to keep Iran from building nuclear weapons,” he said.
Stricker said another option would be to destroy access through the eastern and western tunnel entrances, preventing Iran from re-entering the complex while allowing the site to be monitored for renewed activity.
Preventing reconstitution
For Rebeccah Heinrichs, a senior fellow at the Hudson Institute, Pickaxe represents a different phase of the military campaign.
While Washington still has conventional military targets it can strike from the air, Heinrichs said Pickaxe presents a more complex challenge because of its depth and its potential role in rebuilding Iran’s nuclear program.
If Trump concludes that airpower alone cannot prevent Iran from restoring its nuclear capabilities, Heinrichs said any use of US forces on the ground would more likely involve a limited special-operations mission than a conventional invasion.
"This would be a special operations mission on the ground," she told Eye for Iran, suggesting any such operation would likely be conducted alongside Israel to secure or remove sensitive nuclear material.
There is no public evidence that Washington is planning such an operation.
Heinrichs also suggested that the United States may have deliberately avoided striking Pickaxe so far to preserve the possibility of entering or securing the complex, although Washington has not publicly indicated that this was its reasoning.
Whether Trump ultimately orders an attack remains uncertain, and his warning may be intended partly to deter Iran from activating the facility.
But the president’s remarks, the Israeli intelligence assessment and mounting concern among nuclear experts have placed Pickaxe Mountain at the center of a broader strategic question: how to prevent Iran from rebuilding its nuclear program after months of military strikes.
Pakistan and Qatar are pressing ahead with efforts to revive Iran-US diplomacy, but Tehran has yet to publicly endorse the initiative as fighting continues over the Strait of Hormuz and resistance to renewed negotiations grows within sections of the Iranian establishment.
The Pakistan-Qatar initiative remains one of the few active diplomatic channels between Tehran and Washington. But continued military operations and widening divisions within Iran's political establishment have cast doubt on whether the fragile understanding between the two sides can survive.
Iranian Interior Minister Eskandar Momeni traveled to Islamabad on Monday for meetings with Pakistan's civilian and military leadership, including Field Marshal Asim Munir, Prime Minister Shehbaz Sharif and Interior Minister Mohsin Raza Naqvi.
Officially, the visit focused on implementing agreements reached during President Masoud Pezeshkian's visit to Pakistan last month. Pakistani media, however, reported that Islamabad is working to preserve the memorandum of understanding (MoU) and prepare the ground for another round of indirect negotiations.
Following his meeting with Momeni, Sharif expressed concern over rising tensions in the Persian Gulf and said Pakistan would continue "to play the role of an honest mediator and facilitator between Iran and the United States."
Momeni, in turn, thanked Sharif, Foreign Minister Ishaq Dar and Field Marshal Asim Munir for securing what he described as the "Islamabad understanding" between Tehran and Washington, underscoring that the talks extended well beyond routine bilateral relations.
Hardliners resist
The prospect of renewed diplomacy continues to divide Iran's political establishment.
Parliament Speaker Mohammad-Bagher Ghalibaf, who has played a central role in Iran's negotiations with Washington, warned on Sunday that the United States continued to reinforce its military presence while claiming to seek peace.
"They have underestimated our intelligence," he wrote on X. "We have become masters at recognizing these American tricks."
"Actions must confirm their claims, not contradict them."
His remarks were interpreted by some hardline commentators as leaving the door ajar for renewed diplomacy, prompting criticism from conservatives who warned against trusting mediation efforts led by Pakistan and Qatar.
The conservative daily Kayhan argued that the current conflict presented a "golden opportunity" to break what it described as the recurring cycle of war, ceasefire and negotiations, insisting a tougher military posture would serve Iran better than another round of talks.
The IRGC-linked newspaper Javan, however, took a more nuanced position, arguing that Iran should remain prepared for both war and negotiations, provided any talks were aimed at consolidating gains achieved on the battlefield rather than restoring trust in Washington.
War clouds diplomacy
The mediation effort unfolded alongside another day of escalating military exchanges.
According to Iranian state media, Iranian forces struck US military facilities in Bahrain, Kuwait and Jordan using missiles and one-way attack drones.
The IRGC claimed the attacks destroyed early-warning radars, Patriot air-defense systems and satellite communications equipment, although those claims could not be independently verified.
The IRGC also warned commercial shipping against relying on US military protection in the Strait of Hormuz. A source quoted by the IRGC-affiliated Fars News Agency said traffic through the waterway had effectively stopped and warned it would remain closed as long as US military operations continued.
Meanwhile, US Central Command announced another round of strikes targeting Iranian military infrastructure used to threaten maritime shipping. Iranian media reported attacks on military sites in Bandar Abbas, Bushehr, Chabahar, Qeshm Island and other strategic coastal locations.
Defense analyst Farzin Nadimi told Iran International that despite nine days of intensive US strikes, Washington had so far failed to restore commercial navigation through the Strait of Hormuz, leaving difficult decisions about the next phase of the campaign.
Regional risks grow
The regional risks also continued to widen beyond the Persian Gulf.
Yemen's Houthi movement announced it had begun imposing a naval blockade on Saudi Arabia and barred Saudi oil tankers from transiting the Bab al-Mandab Strait.
Analyst Shahir Shahid-Sales said the move was likely coordinated with Tehran.
"The key question is whether the Houthis can actually enforce this blockade and how serious a conflict with Saudi Arabia may become," he wrote on X. "If they begin striking oil tankers, oil prices are likely to rise even further."
Foreign intelligence penetration of Iran is hardly a secret. But Iranian Foreign Minister Abbas Araghchi has now suggested the operation goes beyond locating officials or stealing information and seeks to influence decision-making inside the Islamic Republic itself.
The remark marked a subtle but significant shift. Iranian officials have long acknowledged espionage and intelligence breaches, particularly after the precision with which senior commanders, nuclear scientists and political leaders have been located and targeted exposed profound vulnerabilities within Iran's security establishment.
Speaking in the first part of a nearly 90-minute podcast interview, Araghchi suggested foreign intelligence activity inside Iran may be something more ambitious than gathering intelligence: shaping the decisions of the state itself.
He made the remarks when asked by establishment podcaster Javad Mogoei about the opening hours of the war, when coordinated strikes killed Iran's supreme leader along with several senior military, security and political figures.
"I believe this security breach is not limited merely to infiltration and obtaining information," Araghchi said.
"Sometimes it also exists in influencing the decision-making process itself. And even more importantly, it extends to shaping our psychological environment and public perception."
Araghchi did not identify any foreign intelligence service or explain how such influence might operate, although Israel appeared to be the implied actor in the discussion.
To Alex Vatanka, a senior fellow at the Middle East Institute, that distinction was the most revealing part of the interview.
"The job of these assets isn't just to leak the location of leaders in a certain place to be killed," Vatanka told Iran International. "It is to influence decision-making. It's to influence the policy process."
Vatanka believes Araghchi's remarks were directed as much at Iran's internal political debate as at foreign intelligence operations.
"He's hinting that elements inside the regime are openly arguing for policies that the enemy—the United States and Israel—prefer," he said. "Is he talking about the pro-war hawks? Is this part of scoring points against one another? Could well be."
"These things are obviously not accidental," he added. "This is very much messaging at a moment of war."
Mogoei nevertheless raised another possibility, invoking Masoud Kashmiri, the alleged infiltrator who rose through the ranks of the Islamic Republic before the 1981 bombing that killed President Mohammad Ali Rajai and Prime Minister Mohammad-Javad Bahonar.
"Perhaps we have another Kashmiri," he suggested.
Araghchi did not endorse the comparison, saying Iran's adversaries had become familiar with the supreme leader's routine and that the Intelligence Ministry meeting may simply have coincided by chance.
Whether Araghchi was describing a sophisticated foreign influence operation or speaking more broadly about the effect of outside pressure on Iran's internal politics is where analysts begin to diverge.
Omid Memarian, an Iran analyst at DAWN, said one possible manifestation of the kind of influence Araghchi described would be officials advocating policies that prolong the war despite the damage continued conflict causes to the Islamic Republic's own interests.
"Some of the decisions they are making are exactly the things that Israelis might wish for," Memarian told Iran International.
"When it comes to Iran's national security and national interests, they don't make sense,” he added. "We see the smoke. We don't see the fire."
Behnam Ben Taleblu, senior director of the Iran Program at the Foundation for Defense of Democracies, said Araghchi's comments should also be viewed through the lens of Iran's internal political rivalries.
"That doesn't mean these guys are doves by any measure," Taleblu told Iran International. "But it does mean that they have different views about how best to preserve, protect and defend the Islamic Republic."
Taleblu said public acknowledgments of security failures are often aimed less at the Iranian public than at rival political factions or security institutions, with officials defending their own approach while criticizing competing strategies.
He said Araghchi's comments also highlighted a less discussed aspect of intelligence operations: their ability to shape leaders' perceptions rather than merely gather information.
"Influence is to shape their decision-making, perhaps by lulling the Supreme Leader's office into a false sense of security and back into the routines that existed before," he said.