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The Iran and Ukraine wars are colliding on the world’s biggest lake. Here’s what to know

(CNN) — The Caspian Sea has become the latest region to be sucked into the growing conflict between Iran and its adversaries – not least because it’s a vital artery in the growing relationship between Iran and Russia.

Ukraine at the weekend said its drones had struck two Russian vessels carrying military cargoes in the Caspian, the world’s largest inland body of water. It asserted that both had left Iran for a Russian port.

In a post on X Saturday, Ukrainian President Volodymyr Zelensky said the targets included “ships that were involved in transporting military cargo from Iran, as well as a warship,” subsequently identified by Ukraine’s security service as a Russian missile boat.

Iran countered that one of its commercial vessels carrying a cargo of iron had been struck, killing one seafarer and injuring three others.

The ship, which it did not name, was sailing from the Russian port of Astrakhan to Anzali in Iran, which Iranian regional governor Hadi Hagh-Shenas described as “a safe and reliable corridor for commercial exchanges between the two ports.”

Tensions escalated further Monday when Iranian foreign ministry spokesman Esmail Baghaei said, “Ukraine’s dangerous adventurism will certainly not go unanswered by us.” Meanwhile, Ukraine’s Chargé d’Affaires in Tehran was summoned to the foreign ministry over the incident.

Where is the Caspian Sea?

The recriminations reflect the growing importance of the Caspian, which is bordered by five countries, including Iran and Russia. With the blockade of Iranian ports in the Persian Gulf and the Gulf of Oman, the Caspian has taken on new significance as a trade route.

The Caspian can help Iran towards “a diversified trade strategy, especially if Iran promotes trade with Russia, the Caucasus, Central Asia, China via rail, and, indirectly, Eastern Europe,” according to Bijan Khajehpour, managing partner of Vienna-based Eurasian Nexus Partners, a consulting firm.

It is “a strategic complement rather than a substitute for Iran’s existing maritime access through the southern waters,” Khajehpour told CNN.

Russian grain and steel are among the cargoes that cross the Caspian. Iran has developed several significant ports on the sea, among them Anzali. Oil and gas from Kazakhstan are transported from the Caspian to a hub on the Black Sea.

For Russia, the Caspian is an important conduit to central Asia and Iran – and a critical route in its expanding strategic partnership with Tehran, one that has a military component as well as Russia’s role in Iran’s civilian nuclear program and oil exploration in Iran.

“The recent blockade by the US (of Iranian ports) has underlined the strategic value of the Caspian Sea route” says Khajehpour. It is also less vulnerable to international sanctions because it is landlocked and largely controlled by Iran, Russia and neighboring states beyond Western naval reach.

Why is the sea so valuable to both Iran and Russia?

The Caspian has become a passageway for the growing military links between Moscow and Tehran. Iran and Russia have a broad strategic agreement covering economic and military collaboration, although it is not a mutual defense pact.

Russia received its first batches of Iranian Shahed attack drones via the Caspian early in its war with Ukraine and has since produced new versions of the drones in plants on Russian soil.

The Caspian route linking Iran’s northern ports to the Russian port of Astrakhan has been targeted by Ukraine before. Last August a cargo ship – the Port Olya 4 – was destroyed while reportedly loaded with Shahed-136 drone components and Iranian munitions.

In 2024, CNN reported that a Russian cargo ship suspected of carrying Iranian ballistic missiles for Moscow’s war against Ukraine was seen at a Russian port on the Caspian Sea. The US Treasury department assessed that the Russian Ministry of Defense had “used the vessel Port Olya-3 to transport CRBMs (close-range ballistic missiles) from Iran to Russia.”

Then-US Secretary of State Antony Blinken said Washington believed the Russian military had received shipments of Iranian Fatah-360 ballistic missiles and would “likely use them within weeks in Ukraine against Ukrainians.”

At the same time, the US National Security Council warned of the deepening military cooperation between Iran and Russia. Spokesperson Sean Savett told CNN back then that “any transfer of Iranian ballistic missiles to Russia would represent a dramatic escalation in Iran’s support” for the Kremlin in its invasion of Ukraine.

Iran denied it was providing military assistance to Russia at that time.

What is Ukraine hoping to achieve from its strikes?

Ukraine’s drone attacks on vessels and energy infrastructure in the Caspian at the weekend are a demonstration of its growing long-range capabilities and its goal of damaging the industries that support Russia’s war effort.

It’s also a recognition that Iran – like North Korea – plays a significant role in supplying Russia with weapons.

And above all, it’s astute timing from the Ukrainians, with Zelensky traveling to Washington this week to meet with President Donald Trump. Besides the Caspian strikes, Zelensky has said that according to Ukrainian intelligence Russia has provided satellite data to Iran to carry out attacks on US facilities in the Middle East.

The message: we are on the same side.

The-CNN-Wire
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Global bond markets are getting hammered. Here’s what’s driving the sell-off

New York (CNN) — Investors’ concerns over a range of issues from inflation to hefty government deficits are driving a global bond market-sell off, creating a headache for policymakers and pushing up borrowing costs for governments and consumers.Yields rise when bond prices fall. Investors are selling bonds, pushing prices lower and yields higher: The 30-year US Treasury yield on Tuesday hit 5.34%, its highest level since 2007.The yield’s rise to a 19-year high is a part of broader unease in global bond markets. In France and Germany, 10-year bond yields this week hit their highest levels since 2008 and 2011, respectively. In Japan, the 10-year yield hit its highest level in 30 years.Bond yields across various economies are surging to their highest levels in years while investors reckon with a mix of factors from stubborn inflation to rising government deficits to a wave of new corporate debt issuance.On one hand, the sell-off reflects investors’ longstanding concerns about unchecked government spending and rising deficits. Yields are rising as investors demand more compensation for the risk of lending money to governments amid a backdrop of shakier finances.But the bond market angst has been exacerbated this year by the US-Israeli war with Iran and the surge in oil prices. Brent crude on Tuesday rose above $91 per barrel. Investors are demanding a higher yield on bonds to compensate for the risk of inflation eating into their return.The Iran war has also rocked bonds as investors weigh the impact of surging oil prices and the possibility that central banks could keep interest rates higher for longer, or even raise them, to combat inflation.“The worsening situation in the Middle East is likely a factor in intensifying concerns over inflation and concerns over the US fiscal position,” Derek Halpenny, head of research for global markets at MUFG, said in a note.“There remains zero appetite in the US for addressing the US fiscal position and that is increasingly weighing on the long end of the curve,” Halpenny said.Government bonds are also under pressure from a wave of new debt from companies, including tech firms focused on artificial intelligence. Tech companies are issuing debt to fund the buildout of AI infrastructure, and those bonds are competing with government bonds for investors’ attention. Less demand for government bonds pushes prices lower, which pushes yields higher.“Hyperscaler borrowing to fund AI infrastructure is competing for the same pool of buyers at the same moment governments need those buyers most,” Nigel Green, CEO at deVere Group, said in a note. “Crowd two urgent borrowers into one market and the price of patience goes up for everybody.”A surge in bond yields can mean tighter financial conditions, which make it more costly to take out loans, and also puts pressure on the stock market.The 10-year US Treasury yield on Tuesday rose to 4.74%, trading near the highest level of President Donald Trump’s second term. The 10-year yield helps set borrowing costs across the US economy, including mortgage rates.The rise in bond yields creates complications for policymakers as governments are faced with rising debt. In the United States, the national debt is nearing a record $40 trillion.For government bonds, the yield is the interest rate the government pays to bond investors – or the government’s cost of borrowing money. The global bond sell-off is pushing up the cost of borrowing for governments in the United States, the United Kingdom, France, Japan and others.Higher yields can pull investors away from stocks, while also altering analysts’ calculations for the value of stocks. US stocks opened lower Tuesday morning: The S&P 500 fell 0.5%, and the tech-heavy Nasdaq Composite dropped 1.2%.“Bonds are on the move: a sharp rise in government bond yields around the world may start to pose a threat to equity valuations and make life even trickier for deeply indebted nations and policymakers,” Neil Wilson, a strategist at Saxo Markets, said in a note.The 30-year Treasury yield traded around 4.7% in February before the war with Iran before climbing in recent months above 5.3% to hit its highest level since 2007.Wall Street is also adjusting to Kevin Warsh’s tenure as Federal Reserve chairman. While a change in leadership at the Fed can trigger some volatility in the bond market, Chairman Warsh’s approach of less communication has added to uncertainty about how the central bank will respond to inflation and other economic shocks. And his refusal to provide forward guidance leaves investors with less clarity about where US interest rates are headed.The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
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