U.S. sanctions threaten Iran's key trade partners across Asia and the Middle East
Washington announced new penalties aimed at companies doing business with Iran, putting pressure on the country’s main trading partners such as China, the United Arab Emirates, Turkey, Iraq and India.
The United States said on Monday it will impose penalties on firms that continue to trade with Iran, describing the effort as an "economic D-Day" aimed at cutting the nation off from global markets. The move targets the network of countries that handle most of Iran's remaining foreign trade.
China remains Iran's largest oil buyer, accounting for roughly 90% of Tehran's oil exports, according to U.S. estimates. Bilateral trade between the two nations was reported at nearly $10 billion in 2025, not counting an estimated $31 billion in crude oil shipments that are not officially recorded. While the U.S. Treasury has sanctioned several Chinese refiners for purchasing Iranian oil, it has not targeted Chinese banks. Analysts say Beijing is likely to increase compliance by state banks and oil firms to avoid U.S. enforcement, even as it publicly opposes the sanctions.
The United Arab Emirates, which shares a short maritime border with Iran, has historically been a major conduit for Iranian trade, handling about $28 billion in bilateral commerce in 2024. The UAE recently announced a suspension of all trade and financial transactions with Tehran after missile incidents near its territory. U.S. officials argue that Dubai is a hub for Iran’s transshipment and shadow banking, and they are urging Emirati leaders to tighten controls.
Turkey’s trade with Iran reached $5.7 billion in 2024, with Ankara importing natural gas and exporting manufactured goods. A long-term gas contract that expired in July led to a spike in Turkish imports of Iranian gas, now comprising roughly 19% of Turkey’s total gas supply. Turkey has not indicated plans to sever economic ties despite seeking alternative sources.
Iraq depends on Iranian electricity and gas, receiving up to 660 billion cubic feet of natural gas annually under a renewed five-year contract. Iranian energy supplies accounted for more than 30% of Iraq’s electricity generation in 2023, and bilateral trade exceeded $10 billion in 2025. The new U.S. sanctions could affect Baghdad’s payments for Iranian gas, which total $4-5 billion each year.
India, one of Iran’s top five trading partners, saw bilateral trade fall to about $1.6 billion in the year ending March 2026. After a brief U.S.-approved pause, India resumed importing Iranian crude oil in April, but the resumption may be jeopardized if Washington enforces its threat to sanction entities, including Indian refiners, that purchase Iranian energy.
"Chinese authorities care more about dollar access in financing and market entry to the U.S.," said Dan Wang, China director at Eurasia Group.
"The majority of Iran's transshipment, smuggling, and shadow banking activity takes place in Dubai, so Washington must do what it can to help the UAE's national leaders in Abu Dhabi convince and cajole Dubai's leaders to play ball," wrote former U.S. Treasury official Matthew Levitt.
The sanctions initiative underscores the United States' strategy to pressure Iran by targeting the foreign firms and governments that sustain its economy amid ongoing regional conflict.