Geopolitical Risk · Energy Markets
Dynamics of Iran, Russia and China
Three sanctioned powers. One interlocking dependency structure. Understanding what each side needs from the others is essential to reading the new energy and security order.
What Russia Depends on Iran For
- Since 2022, Russia’s dependence on Iran has been primarily military. In 2023, Iran began supplying Russia with Shahed-136 loitering munitions under a reported $1.75 billion agreement — providing both drones and technical assistance for domestic production.
- By 2025, a large manufacturing facility in the Alabuga Special Economic Zone in Tatarstan had localized the vast majority of production. These drones have been used extensively in Ukraine.
- Russia also depends on Iran as a transit corridor. The International North-South Transport Corridor (INSTC) — a network of shipping lanes, railways, and roads — links Russia to Iran and onward to Asia, bypassing Western-controlled maritime routes.
What Russia Supplies to Iran
- Russia-to-Iran trade is dominated by agricultural products — wheat, barley, and corn — alongside machinery, metals, timber, fertilizers, and industrial inputs. Bilateral trade reached $4.8 billion in 2024, up 16%.
- In September 2025, Iran signed a $25 billion agreement with Russia to build four small nuclear power plants in Sirik, expected to produce 5 GW of electricity — addressing Iran’s chronic power shortage.
- In December 2025, Iran launched three domestically developed satellites into low Earth orbit using a Russian Soyuz rocket from Vostochny Cosmodrome.
What China Depends on Iran For
- Energy is the core of the relationship. Iran supplies around 13% of China’s total oil imports at below-market prices, locked in through the 2021 25-year cooperation agreement.
- China is Iran’s top export partner — Iranian exports to China amounted to 26% of all Iranian exports in 2025, driven by oil, gas, and petrochemicals.
- This discounted oil is strategically significant: it is one of the key reasons China absorbs global oil price shocks better than Western competitors.
* IFPRI · Center for Strategic and International Studies · WTO · EIA