I agree with you you can work using VPN. If they do not allow you to trade because they are Iranian, then the only way to use a VPN is to not know where you are working. That's why try to set policies in the face of circumstance.
As per the latest update, they have Ban many countries from using localbitcoins and not only Iran. Here is the complete list of countries and if you belong to any one of them, you will not be able to use that site to buy/sell bitcoins.
Customers residing or otherwise located in the following countries are required to have an enhanced due diligence process. The countries are defined by EU commission: Afghanistan, American Samoa, The Bahamas, Botswana, Democratic People’s Republic of Korea, Ethiopia, Ghana, Guam, Iraq, Libya, Nigeria, Pakistan, Panama, Puerto Rico, Samoa, Saudi Arabia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, US Virgin Islands, Yemen. The process to activate the account will be introduced in the near future. If you’re not willing to wait for your account to be activated, you can withdraw your bitcoins by deleting your account.