Trade Without Cash: Pezeshkian Concedes Iran's Funds in China Are Blocked as the Economic Press Tallies the Cost of Aviation and Banking Isolation

Iran is moving from sanctions circumvention to what the September 25 Iran Economic Press Review calls continuity management. The most telling signal is access to hard currency, and it came from the top. President Masoud Pezeshkian said publicly that Iranian funds in China are blocked and that Iran cannot freely receive the proceeds of some exports. That admission separates selling goods from actually collecting and using the money, and it weakens the domestic claim that trade with China and Russia provides a reliable shelter. Official data show real GDP contracting 10.1 percent in the first quarter of the Iranian year, and 4.6 percent excluding oil. Meanwhile, UAE, UK, and U.S. measures are closing in on settlement, trade finance, insurance, and aviation at the same time. The review judges that Iran is not economically isolated, but that the quality of its economic access is deteriorating. The near-term swing factor is whether talks on Hormuz produce a phased exchange of maritime access for blockade relief. This post summarizes the review for September 25 and follows the September 24 edition.

Markets Price Political Risk

The free-market dollar ended the latest full trading session at about 234,615 tomans, after a daily rise of 4,000 tomans reported by TejaratNews. EghtesadNews described the market as driven mainly by political risk. Brief relief after reports of U.S.-Iran contacts gave way as uncertainty returned. Gold and coins remain expensive, with 18-karat gold at about 24.1 million tomans a gram (about $103) and the Emami coin at about 240 million tomans (about $1,023). Households are still using hard assets to protect themselves against depreciation.

The Tehran Stock Exchange lost about 4 percent over the week, with a reported net outflow of roughly 16 trillion tomans (about $68 million), before a rebound in the final session on diplomatic expectations. Brent traded near $105.73 a barrel early Friday, slightly below Thursday’s spike, as traders weighed the prospect of U.S.-Iran de-escalation.

The review reads the currency market less as a conventional inflation trade and more as a running verdict on Iran’s external access. Tehran can stabilize some administered prices. It cannot fully offset the effect of restricted settlement channels and expected new sanctions on the free-market rate.

The Contraction Reaches Beyond Oil

The Statistical Center of Iran, carried by IRNA, reported real GDP growth of minus 10.1 percent in the first quarter of 1405 (the Iranian year that began in March 2026) with oil included, and minus 4.6 percent without oil. Iranian commentary attributes part of the decline to wartime disruption. The non-oil figure matters more. It shows that the shock has spread through services, trade, industry, and investment and is no longer confined to the oil sector. The September 21 review covered the first reporting of the figure.

Aviation Sanctions Become a Trade Problem

Iranian business reporting now acknowledges that aviation restrictions are raising the time and cost of travel for exporters and importers. They also complicate contract negotiations, procurement, and some supply routes. A Chamber of Commerce import representative told EghtesadNews that Iran has found substitutes during past sanctions episodes, but conceded that the current restrictions will affect foreign trade. Separate reporting warned that vaccines and medicines that depend on air transport are especially exposed.

Official messaging points the other way. The Civil Aviation Organization, quoted by IRNA, called foreign flight flows stable and urged the public not to overreact to isolated cancellations. The review finds that reassurance increasingly hard to square with the record. Reuters reported that Iranian airlines were barred from the UAE and Oman on September 24, the first major operational effect of Washington’s threat to sanction foreign companies that service Iranian carriers. Iranian reporting has described suspensions involving Georgia, Azerbaijan, and Baghdad, and TejaratNews reported on Friday that Najaf flights had also been canceled. The mechanism works as U.S. policy intended. Airports, fuel suppliers, banks, and service firms in third countries must choose between Iranian business and exposure to U.S. sanctions.

Medicine and Household Pressure

EghtesadNews reported a scarcity of acetaminophen-codeine in pharmacies and described ordinary acetaminophen as restricted or rationed in some channels. The same reporting links medicine stress to sanctions, foreign exchange, financial transfers, air transport, and imported raw materials. The review treats this as a warning signal. It is not evidence of a uniform national shortage.

The government is widening its social cushion. The Planning and Budget Organization says 44 million people have been identified for higher electronic food credits, according to Mehr. IRNA describes loans to damaged firms, customs and tax relief, and measures to reduce postwar layoffs. These steps are modest relative to the scale of depreciation. However, they are politically significant because they show an effort to contain distributional stress before it becomes a labor or public-order problem.

How Tehran Is Preparing for Prolonged Pressure

Iran is trying to draw privately held foreign currency into formal financing. Mehr describes new foreign-currency funds that would pay returns in foreign currency, return principal in the same currency, and offer tax incentives. The money would be channeled toward export-earning and high-technology industries. The review reads the scheme as both a financing innovation and a liquidity signal. The authorities want access to foreign exchange that is physically inside the country because access to proceeds held abroad is becoming less reliable.

Pezeshkian’s remark about China is the most revealing admission of the day. China can remain a major buyer and political partner while still limiting Iran’s ability to repatriate, convert, or freely deploy its proceeds. The Financial Times has argued that Washington’s economic campaign faces a structural China problem, because Beijing can keep buying Iranian commodities. The review accepts that point but draws a different conclusion from it. Gross trade flows can overstate the economic value Tehran can actually mobilize, and China may be a buyer of last resort without being a dependable source of convertible cash.

Tehran is also trying to replace air and maritime dependence with land capacity. IRNA highlights the 735-kilometer Chabahar-Zahedan railway, more than 2,000 kilometers of road projects, and higher port activity as part of a push toward the Indian Ocean and Central Asia. TejaratNews quotes the head of the parliament’s National Security Commission describing today’s competition as a war of corridors, with repeated corridor talks with neighbors, especially Russia. The review calls this a rational resilience strategy. Land corridors can move goods, but they cannot solve settlement, currency conversion, trade finance, or counterparty risk on their own.

In energy, the bureaucracy is emphasizing reconstruction, drilling, and inventories ahead of winter. Pars Oil and Gas says active rigs have risen from four to 13 and that reconstruction continues at damaged South Pars facilities. Shana reports accelerated refinery repairs and sufficient liquid-fuel storage for power plants, and the grid operator Tavanir is preparing for possible winter gas-pressure constraints.

The Domestic Debate Turns on Cost

The review sees a practical divide in Iranian policy messaging more than a factional one. One line treats Hormuz and regional disruption as leverage that can force relief from the U.S. blockade and financial sanctions. The other, visible in messaging from the presidency, the central bank, the economy ministry, and the private sector, stresses the mounting cost of restricted liquidity, air access, trade finance, and investment uncertainty. These positions are not mutually exclusive. However, the economic technocracy is increasingly supplying evidence that prolonged coercive leverage carries domestic costs that evasion networks cannot fully offset.

By acknowledging that funds can be blocked even in China, Pezeshkian undercut a core resilience narrative without rejecting trade with the East. The implication is that sanctions relief is becoming a practical condition for making export revenue usable. That strengthens officials who argue for a negotiated reopening of financial channels, even as Tehran continues to insist on reciprocal sequencing.

The private sector has also become more specific. Chamber representatives are not predicting an immediate trade collapse. Their language has moved from generic talk of circumvention to concrete costs, including longer trips, harder contract follow-up, disrupted air cargo, exposed medicine supplies, and uncertain foreign counterparties. The review notes that private-sector reporting often reveals such frictions before they appear in official data.

Third Countries Tighten the Financial Net

The external measures are accumulating across jurisdictions. The Central Bank of the UAE has barred Bank Melli Iran’s UAE branches from transactions to and from Iran, including trade finance and fund transfers, citing compliance failures. Because the UAE has long been one of Iran’s most important commercial and financial interfaces, the effect extends well beyond one branch network. In the United Kingdom, the Office of Financial Sanctions Implementation now applies a presumption of denial to license applications involving Bank Sepah, Melli Bank plc, Bank Saderat, Persia International Bank, and Bank Tejarat. The current general license expires on October 22 and will not be renewed, and broader UK restrictions on finance, energy, maritime services, and insurance take effect on September 29.

Washington is targeting the infrastructure of substitution as well as Iran’s formal banks. The Treasury designated Russia’s VTB Bank on September 14 over alleged involvement in Iranian sanctions evasion, and Lloyd’s List reported U.S. action against BitBank, a crypto platform alleged to have processed payments linked to an Iranian shipping-payment system for Hormuz.

The shipping data show the hidden price of keeping oil moving. Lloyd’s List reported record or near-record VLCC rates in early September and Middle East crude exports in August roughly 36 percent below the pre-crisis comparison period. Vortexa estimated that most crude crossing Hormuz was moving through shuttle and ship-to-ship arrangements. S&P Global Market Intelligence expects elevated energy, freight, and input costs to persist well into 2027. As a result, even a gradual recovery in physical flows would not quickly restore prewar transaction costs.

Net Assessment

The review concludes that Iran retains substantial capacity to keep essentials moving. It has large energy assets, long land borders, working trade with China and Russia, corridor options, a sophisticated evasion ecosystem, and administrative controls. On current evidence, these make a sudden sanctions-induced collapse unlikely. The more important change is cumulative institutional friction. Aviation bans, tighter UAE and UK banking rules, pressure on Russian and alternative channels, and high shipping and insurance costs are widening the gap between selling a commodity and turning the proceeds into usable hard currency.

The review also warns about blind spots on both sides. Iranian official coverage treats successful rerouting as proof that sanctions are failing and says little about freight, insurance, discounts, and trapped proceeds. International coverage can overstate isolation by underweighting land borders, sanctioned fleets, rationing, and domestic manufacturing. Operational indicators such as flights, bank access, tanker movements, realized export receipts, and exchange rates are more reliable than either side’s messaging.

The review frames the strategic contest as a race between international patience and Iran’s economic, political, and social endurance. For policymakers who favor sustained pressure, it argues for tighter enforcement against oil exports, shadow-fleet shipping, the banks and trading houses that convert Iranian revenue, and evasion routes through third countries. It pairs that with humanitarian exemptions and a clearly defined diplomatic off-ramp in return for substantive and verifiable concessions. Israeli Prime Minister Benjamin Netanyahu framed the political end state more starkly at the UN on September 24, saying that “the power of the people will overcome the people in power.”

Key Points

1. Access to hard currency, and not export volume alone, is now the clearest stress signal. Pezeshkian’s acknowledgment that funds in China are blocked separates selling from collecting. (High confidence on the statement.)

2. The contraction is broad. Official data show real GDP down 10.1 percent in the first quarter of 1405, and 4.6 percent excluding oil. (High confidence; official figures.)

3. Sanctions pressure is becoming institutionally cumulative. UAE, UK, and U.S. measures are hitting settlement, trade finance, insurance, aviation, and service providers at once, and the burden is shifting to compliance decisions in third countries. (High confidence on the measures.)

4. Official Iranian messaging understates the breadth of aviation disruption. Business reporting and confirmed bans in the UAE and Oman contradict the claim of stable flows. (High confidence.)

5. Medicine stress is a warning signal, and the evidence does not yet show a national shortage. (Low-to-moderate confidence on scale; reported conditions only.)

6. The state is preparing for prolonged compression. Foreign-currency funds, corridor investment, energy repairs, employment support, and expanded food credits all point to a government that does not expect rapid relief. (Moderate confidence.)

7. High oil prices help Tehran only to the extent it can turn barrels into usable proceeds. Hormuz remains leverage for Iran, but prolonged use of it damages Iran’s own export economy. (Moderate confidence.)

What to Watch

• Whether the UAE, Oman, Iraq, Georgia, Azerbaijan, Turkey, China, or Russia change access for Iranian airlines, and whether foreign fuel, handling, or ticketing firms withdraw services.
• Any sustained move in the free-market dollar above the recent resistance area near 237,000 tomans, or a widening gap between free-market and administered rates.
• Implementation of the UAE restrictions on Bank Melli and any similar action against other Iranian banks or trade-finance channels.
• Preparations for the UK sanctions expansion on September 29, especially in insurance, maritime services, oil, petrochemicals, and banking.
• Actual Hormuz transit counts, ship-to-ship volumes, and tanker charter rates.
• New evidence on medicine availability, air-cargo-dependent imports, winter gas constraints, power-plant fuel inventories, and South Pars repairs.
• Any operational U.S.-Iran agreement that sequences Hormuz access, asset unfreezing, or blockade relief, beyond statements of negotiating intent.

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This post summarizes the Iran Economic Press Review for September 25, 2026 (3 Mehr 1405), a standalone open-source product with a source cutoff of 06:00 UTC. Because Iranian dailies generally do not print on Fridays, the review relies on current web editions, agency feeds, and live market pages, including TejaratNews, EghtesadNews, IRNA, Mehr, and Shana, and does not present Thursday front pages as Friday editions. Reuters, the Financial Times, Lloyd’s List, S&P Global Market Intelligence, the Central Bank of the UAE, the UK Office of Financial Sanctions Implementation, and the U.S. Treasury serve as external checks. Medicine shortages are reported conditions, not an official national inventory, and official Iranian and foreign claims are attributed as claims. The confidence tags on the Key Points follow the review’s own caveats. Toman amounts are converted approximately at a free-market rate of 234,615 to the U.S. dollar, for scale only. The same day’s daily intelligence update covers the diplomatic and military picture.