Iran is expected to receive its first shipment of 400 Chinese-made shoulder-fired air defense missile systems within weeks as it seeks to rebuild its air defenses amid an ongoing war with the US.

Three sources with knowledge of the agreement disclosed the information to Reuters.

Valued at between $60 million and $70 million, the purchase represents one of Tehran’s largest known efforts to bolster its short-range air defense capabilities since the outbreak of hostilities with the US and Israel.

According to the sources, the contract covers between 300 and 400 man-portable air defense systems, or MANPADS, including Chinese-made QW-12 and FN-16 missiles.

The deal was signed with Hong Kong-based Zhongqing Baoshang International Investment, which reportedly acted as an intermediary between the Iranian side and the Chinese supplier.

Iran’s Ministry of Foreign Affairs has not yet responded to a request for comment from Reuters regarding the information provided by the sources, who spoke on condition of anonymity due to the sensitivity of the matter.

China’s Ministry of Foreign Affairs issued the following statement:

“The relevant reports are completely baseless. China has consistently played a role in promoting peace and bringing an end to the conflict.”

Beijing-based Zhong Qing Bao Shang Group, the parent company of Zhongqing Baoshang International Investment, did not immediately respond to a request for comment sent on Tuesday.

Iran needs to rearm following months of conflict during which the US and Israel struck facilities tied to its missile, drone, and air defense programs. Tehran responded to those attacks with salvos of ballistic missiles and drones.

The fighting demonstrated the difficulty of defending static military and strategic installations against advanced fighter jets and precision-guided munitions.

Washington abruptly halted its two-week bombing campaign on Saturday. However, US President Donald Trump said attacks would resume if negotiations aimed at ending the five-month war—which has theoretically been under a ceasefire since April—fail.

The delivery of hundreds of MANPADS systems would significantly expand Iran’s inventory of short-range air defense weapons.

However, the sources cautioned that while the agreement has been signed, the delivery schedule, quantities, and other operational details remain subject to change.

Under the plan agreed upon by the parties, initial deliveries will be transported by air from the western Chinese city of Urumqi before being routed through Pakistan to Iran. The sources did not clarify whether transport following the transit through Pakistan would occur by air or land.

The Pakistani military’s public relations wing, ISPR, said in a statement:

“Allegations that Pakistan is playing a role in the supply of air defense weapons from China to Iran are completely fabricated and contrary to fact.”

Two Western intelligence sources and an Iranian official said Tehran is also exploring the option of using overland routes to transport Chinese-made military equipment and dual-use components more covertly, reducing the risk of shipments being intercepted.

The procurement process underscores how the Islamic Republic of Iran continues to rely on a combination of domestic arms production and foreign suppliers, despite years of sanctions and defense import restrictions.

Reuters previously reported, citing individuals familiar with the discussions, that Iran was close to concluding a separate deal to purchase anti-ship cruise missiles from China. Reuters was unable to confirm whether that agreement was finalized.

Crude oil shipments from Saudi Arabia’s Yanbu Port on the Red Sea coast have dropped by 40% over the past few days.

According to data published on July 26 by maritime intelligence firm Vortexa, the Riyadh administration has begun utilizing the SUMED pipeline in Egypt and alternative transit routes in an effort to bypass the naval blockade declared by forces aligned with Sanaa.

The sharp decline in shipment volumes follows retaliatory operations and the enforcement of a maritime blockade against Saudi Arabia by the Yemeni Armed Forces, operating under the Ansarallah movement.

Riyadh has maintained military strikes and blockade measures against Yemen for nearly 12 years.

A Sunday report by maritime intelligence firm Windward, drawing on Vortexa data, noted that Saudi Arabia has established a new logistical framework to maintain its export flows. “Saudi Arabia has created an alternative export route functioning via the SUMED pipeline and the Cape of Good Hope,” the report stated. The agency reported that this shift has driven up transportation costs by approximately $9 per barrel.

The market analysis report provided the following assessment regarding the operational mechanics of the transition:

“Saudi crude shipments have not stopped; they have been split into two distinct routes. Tankers berthing at Yanbu Port are now operating with their AIS signals completely turned off. Vessels are concealing their locations to avoid inclusion on Ansarallah’s target list. Saudi Arabia has established an alternative export route operating via the SUMED pipeline and the Cape of Good Hope. Although this route increases costs and transit times, it demonstrates that the market is capable of adapting to changing conditions.”

Saudi Arabia previously activated a similar alternative route via Yanbu during the initial phase of the US-Israel war, following Iran’s first blockade measures directed at the Strait of Hormuz.

At the time of the Windward report’s release, satellite imagery published by SoarAtlas revealed the ongoing situation at Saudi Aramco’s Jizan Oil Refinery. Massive fires triggered by attacks carried out by the Yemeni Armed Forces were shown to be persisting at the $12 billion facility. Images captured on Saturday documented dense black smoke continuing to billow from a giant oil storage tank at the site.

The Yemeni Armed Forces publicly announced their latest military operations against Saudi Arabia on July 25. They stated that the strikes were executed in response to the Saudi-led coalition resuming aerial bombardments against the Yemeni port city of Hodeidah.

An official statement issued by the Yemeni military under the Ansarallah-led administration provided the following details:

“In response to this overt and criminal aggression, the Yemeni Armed Forces carried out two specialized military operations. In the first operation, sensitive Saudi Aramco facilities in Jizan were targeted with dozens of ballistic missiles and drones. In the second operation, sensitive Saudi Aramco facilities in Yanbu were struck using ballistic and cruise missiles alongside unmanned aerial vehicles.”

Spokespersons for the Yemeni military emphasized that the strikes were “precise” and “direct,” while residents in the city of Yanbu were reported to have heard explosions over the weekend. In the early hours of Saturday, Saudi airstrikes had targeted fuel storage facilities and telecommunications infrastructure in Hodeidah.

Mahdi al-Mashat, President of the Ansarallah Supreme Political Council, issued a warning to the Saudi Arabian leadership in a statement on July 27. “We say to the Saudi enemy that those offering you false hopes will be of no avail. Anything short of an end to the aggression and the complete lifting of the blockade is mere fantasy,” al-Mashat said.

In line with their naval blockade decision, the Yemeni Armed Forces have also targeted two Saudi oil tankers with missiles in recent days. The Sanaa administration officially initiated its maritime restrictions on July 20 under the stated principle of “a blockade for a blockade.”

This latest phase of heightened tension began in early July when Saudi Arabia launched an airstrike targeting Sanaa International Airport for the first time after a prolonged hiatus. Yemeni forces responded by striking Abha Airport in Saudi Arabia with missiles and drones. The attack marked the Yemeni military’s first direct retaliatory strike inside Saudi territory since 2021.

The Saudi-led coalition initially intervened in Yemen in 2015 after Ansarallah took control of the capital, Sanaa, and ousted the Riyadh-backed government. The United Arab Emirates joined as a principal coalition partner, while the UK, the US, and Israel provided logistical support.

During peace negotiations conducted between Saudi Arabia and Yemen in 2023, the parties came close to a final agreement before talks stalled. Nevertheless, those contacts effectively served to freeze large-scale combat operations for an extended period.

The air and sea blockade enforced by Saudi Arabia for over a decade has deepened the humanitarian crisis, particularly due to commercial flight restrictions imposed on Sanaa International Airport. These measures have prevented critically ill and injured civilians from traveling abroad for medical treatment, while the coalition’s military intervention has driven widespread famine and resulted in the deaths of hundreds of thousands of people. Prior to Riyadh’s latest airstrikes, Yemeni forces had been conducting a general mobilization aimed at expelling coalition elements from the country.

The US Department of Defense is facing a severe budgetary shortfall driven by the escalation of the war with Iran, according to current and former American officials cited by The Washington Post.

Officials noted that funding for several critical areas could be completely exhausted in the coming weeks. Budgets allocated for this year’s operations of the Navy and Air Force, which have deployed warships and aviation assets to the Middle East, are projected to run out by the end of July.

To cover the funding deficit expected before the start of fiscal year 2027 on October 1, the Pentagon is internally redirecting its budgetary resources. Under this approach, military exercises and training sessions designed to maintain troop combat readiness are being scaled back or canceled. Additionally, funds originally allocated for the maintenance and repair of military equipment and facilities are being transferred to operational expenses.

In recent weeks, the Department of Defense requested permission from Congress to shift $4.3 billion—initially allocated for personnel training and weapons procurement—to cover emergency requirements. However, no decision has yet been made regarding this request.

The White House has also requested that Congress allocate $67 billion in emergency supplemental funding to cover military expenditures. Despite this, the House of Representatives plans to begin a one-month recess on Thursday, which will delay any decision on the funding for at least several weeks.

“Everyone needs to look at this situation and shake off the complacency,” said Representative Pat Harrigan, a Republican from North Carolina, commenting on the development.

Pentagon Spokesperson Sean Parnell emphasized the critical importance of defense funding, stating that Defense Secretary Pete Hegseth will do everything necessary to maintain the combat readiness of the armed forces.

Secretary Hegseth and the Chairman of the Joint Chiefs of Staff, General Dan Caine, are scheduled to present the justification for the funding allocation at an upcoming hearing before the Senate Appropriations Committee. Russell Vought, the Director of the White House Office of Management and Budget, is also among those scheduled to testify before the committee.

Vought stated last month that the cost of the war had reached approximately $30 billion. However, this White House calculation did not include the cost of rebuilding and repairing US bases damaged as a result of Iranian attacks in the Middle East.

Current and former officials warn that if Congress fails to act, military leadership will soon be forced to make even deeper compromises.

In closed-door discussions, Pentagon officials are expressing more profound anxieties. They emphasize that supplemental funding is urgently required to replenish munitions stockpiles, which are vital for deterring adversaries such as Russia and China.

The US defense budget for this year stands at approximately $1 trillion. This figure includes $150 billion in one-time funding approved by Congress last year for various priority goals, ranging from designing advanced weapons systems to stimulating the domestic defense industry. Meanwhile, the Donald Trump administration has requested a $1.5 trillion defense budget for 2027.

Internal Pentagon assessments indicate that when accounting for base repairs, the replacement of destroyed aircraft, and the replenishment of munitions stockpiles, the total cost of the Iran war could rise to between $80 billion and $100 billion, according to reporting by NBC. Sources state that the repair costs for US military facilities in Bahrain alone could reach $1 billion.

Senators are expected to question Hegseth on the collapse of the ceasefire, rising war costs, and the American service members who lost their lives in Jordan, Bloomberg reported.