The United States cut diplomatic ties with Iran and imposed trade restrictions after the Islamic revolution overthrew the U.S.-allied monarchy in 1979. Leading a drive to isolate Iran, Washington has tightened trade restrictions in recent months.
The United Nations Security Council has also imposed several rounds of sanctions on Iran for its nuclear programme.
All that has had little impact on Khasab, where the re-export trade is a major money-spinner in a small economy.
The old market of Khasab is known as the "Iranian souq", so dominated is it by import and export businesses dedicated to the re-export trade with Iran.
Many of the goods that end up on the smugglers' boats are imported from the neighbouring United Arab Emirates, which does its own roaring re-export trade with Iran. Dubai registered over $4 billion worth of non-oil re-export trade with Iran in 2006.
Tyres and babies' nappies are piled up in the part of Khasab port used by the Iranian boatmen, with a constant stream of pickup trucks ferrying goods onto the jetty.
"We take juice, tea or cigarettes every day," said one Omani taxi driver who was dropping off a consignment of soft drinks.
TENSE TIMES
Wiry, suntanned men from Afghanistan or Baluchis from Iran man over 70 boats moored in Khasab. The boats leave in groups of five or six, with two men to a vessel. Their aim is to get across the Gulf as fast as possible.
It takes less than 50 minutes to get to Qeshm island. A round to trip to the mainland takes under three hours, even in slower speedboats, the smugglers say.
But with so many vessels in the Gulf, through which 17 million barrels of oil pass each day, and with political tensions so high, any incident could quickly escalate.
The U.S. Fifth Fleet is based on the Gulf island of Bahrain. Eight countries are situated on the Gulf coast, their police, military and coastguard all crowding a busy commercial channel.
In January, the United States said five Iranian speedboats aggressively approached three U.S. Navy ships in the Gulf, and a radio message was received warning they could explode.
Iran said its boats were trying to identify the ships. Experts say the message may have come from a radio heckler known as "the Filipino monkey."
The smugglers leaving Khasab carry no radios. Most speak no English or Arabic anyway. If anything is curbing their trade, they say, it is economics rather than geopolitics.
Inflation in the UAE and beyond has eroded profits and the global rise in food prices is also pinching.
Of three trucks that once sold tea, snacks and toiletries to the smugglers in Khasab, one remains. The other two are boarded up, having been priced out of business by inflation.
"Before, there were many Iranians. Now, it is less," said Jaafar Zelabzi, an Indian who runs the still-open truck and accepts Iranian currency. "Prices in the UAE are too high."
