Amid the regional tensions and western sanctions, a complex network of supply routes is beginning to emerge, underscoring the alliances between Russia, Iran and China in confronting mounting US pressure on Iran’s military program and its ability to maintain its production.
In March, Israel carried out a “one of the most significant” strikes on Iran targeting its naval command center at the port of Bandar Anzali, located on the Caspian Sea.
The Caspian Sea, a huge body of water hundreds of miles north of the Gulf. Routinely overlooked, the Caspian has taken on new significance as a trade route linking Russia and Iran, reported The New York Times on Saturday.
For two allies that have been embroiled in wars and facing more Western sanctions than any other country, the waterway provides a passageway for both overt and covert trade — shipments that have helped Iran persist as an adversary to the United States despite overwhelming American military superiority.
Russia is shipping drone components to Iran via the Caspian Sea, US officials say, helping Iran rebuild its offensive abilities after losing roughly 60 percent of its drone arsenal during recent fighting. The officials spoke anonymously to divulge private military assessments.
Russia also provides goods that would typically pass through the Strait of Hormuz, now blockaded by the US Navy, as part of global trade.
Bigger than Japan, the Caspian is considered the largest lake in the world. Much of the trade passing through it is opaque. It has proved difficult to monitor from afar, not least because ships plying the route between Russian and Iranian ports habitually turn off the transponders that allow for satellite tracking, according to maritime tracking groups.
“If you’re thinking about the ideal place for sanction evasion and military transfers, it’s the Caspian,” said Nicole Grajewski, a professor specializing in Iran and Russia at Sciences Po in Paris, according to NYT.
While both Russia and Iran are public about trade in commodities like wheat, trade in weapons systems is a different issue.
Drone shipments show the close defense partnership between Moscow and Tehran. While it is unlikely the Russian parts play a decisive role in Iran’s war with the United States and Israel, they help bolster Tehran’s drone arsenal. If the shipments continue, they will help Iran to quickly rebuild that arsenal, the US officials said.
The trade flowed in both directions in years past, the officials said, with Iran shipping drones to Russia for use in Ukraine even as Russia sent parts to Iran. The need for supplies from Iran diminished after July 2023 however, when Russia, under license from Iran, began producing its own model of the Shahed drone at a factory in Tatarstan.
Asian networks
The US Treasury on Friday announced sanctions against 10 individuals and companies, including several in China and Hong Kong, over accusations they aided Iran's efforts to secure weapons and the raw materials needed to build its Shahed drones and ballistic missiles.
The Treasury move, first reported by Reuters, comes days before US President Donald Trump plans to travel to China for a meeting with President Xi Jinping and as efforts to end the war with Iran have stalled.
In a statement, Treasury said it remained ready to take economic action against Iran's military industrial base to prevent Tehran from reconstituting its production capacity.
The Treasury said it was also prepared to act against any foreign company supporting illicit Iranian commerce, including airlines, and could impose secondary sanctions on foreign financial institutions that aid Iran's efforts, including those connected to China's independent "teapot" oil refineries.
Brett Erickson, managing principal at Obsidian Risk Advisors, said Treasury's actions were aimed at cracking down on Iran's ability to threaten ships operating in the Strait of Hormuz and regional allies.
Iran shut the Strait of Hormuz, a narrow chokepoint between Iran and Oman through which a fifth of the world's crude oil and liquefied natural gas passes, after the US and Israel attacked a large number of targets in Iran on February 28. Shipping through the crucial waterway has ground to a near halt since the war began, sending energy prices sharply higher.
Iran is a major drone manufacturer and has the industrial capacity to produce around 10,000 a month, according to the British government-fund Centre for Information Resilience.
Erickson said the sanctions were still narrowly focused, giving Iran more time to adapt and reroute procurement to other suppliers. The Treasury was also not yet going after Chinese banks that were keeping Iran's economy going, he added.
The companies facing sanctions include the China-based Yushita Shanghai International Trade Co Ltd for facilitating acquisition efforts for Iran to purchase weapons from China; Elite Energy FZCO for transferring millions of dollars to a Hong Kong company to aid the procurement effort; and Hong Kong-based HK Hesin Industry Co Ltd and Belarus-based Armory Alliance LLC for working as intermediaries in the procurements.
The sanctions also targeted Hong Kong-based Mustad Ltd for facilitating weapon procurement by Iran's Revolutionary Guard Corps; Iran-based Pishgam Electronic Safeh Co for procuring motors used in drones; and China-based Hitex Insulation Ningbo Co Ltd for supplying materials used in ballistic missiles.
