Analysis of the Impact of Economic and Trade Sanctions on the Trade of Iran’s Petrochemical Products and Its Major Trading Partners in the Petrochemical Industry

Articles in Press

Document Type : Original research

Authors

1 Imam Sadiq University

2 Sharif University of Technology

Abstract

Economic and trade sanctions, as one of the most important foreign policy tools of major powers, have extensive impacts on the international trade structure of targeted countries. Iran’s petrochemical industry, as the country’s second-largest source of foreign exchange earnings, is among the sectors heavily exposed to these sanctions. The present study aims to analyze the impact of economic and trade sanctions on Iran’s trade of petrochemical goods with 21 major trading partners from different geographical regions, including Asian, European, African, and Latin American countries, during the period 2000 to 2022. Using the generalized gravity model of Tinbergen (1962) and Anderson and van Wincoop (2003) and the panel data method with fixed effects, two separate models for petrochemical exports and imports were estimated. The methodological innovation of this research lies in the simultaneous use of two distinct variables to measure the sanction phenomenon: a dummy variable for sanction intensity to distinguish between periods of severe and weak sanctions, and a continuous variable of sanction cost relative to Iran’s GDP. The high coefficient of determination for the export model (0.924) and the import model (0.956) indicates a very favorable fit. The estimation findings show that the traditional variables of the gravity model, including GDP with coefficients of 4.801 and 8.644, geographical distance with coefficients of -1.009 and -0.727, and shared border with coefficients of 0.705 and 1.037, in the export and import models respectively, are all significant and show the expected theoretical signs. The most important finding of the research is the negative and significant impact of both sanction variables on petrochemical trade; such that the coefficient of sanction cost for imports (-1.008) is approximately three times its coefficient for exports (-0.312), indicating the much higher vulnerability of the import supply chain to sanctions.

Keywords

Main Subjects

Science and Technology Policy Letters

Articles in Press, Accepted Manuscript
Available Online from 25 July 2026

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History

  • Receive Date: 17 May 2026
  • Revise Date: 20 June 2026
  • Accept Date: 25 July 2026

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