Pakistan, Iraq strike energy transit deals with Iran through Strait of Hormuz: Report

Iraq and Pakistan have reportedly reached separate agreements with Iran to allow the transport of oil and liquefied natural gas through the Strait of Hormuz, according to five sources familiar with the arrangements. The developments highlight Tehran’s growing influence over one of the world’s most critical energy routes during the ongoing regional conflict. The US-Israeli war with Iran has sharply disrupted energy exports from the Gulf region, which typically supplies around 20% of global crude oil and LNG. Recent US actions targeting Iranian ports and ongoing instability in the Strait of Hormuz have intensified concerns over global energy security.

According to Claudio Steuer of the Oxford Institute for Energy Studies, Iran’s strategy has evolved during the conflict. “Iran has shifted from blocking Hormuz to controlling access to it ... Hormuz is no longer a neutral transit route, it is a controlled corridor,” he was quoted as saying. Iraq, whose oil exports heavily rely on the strait, was among the countries hardest hit by disruptions. Pakistan, meanwhile, has struggled with rising fuel prices while depending heavily on Gulf energy imports during peak summer electricity demand. In a previously undisclosed arrangement between Baghdad and Tehran, Iraq reportedly secured safe passage for two very large crude carriers transporting approximately 2 million barrels of oil each through the Strait of Hormuz on Sunday.

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An Iraqi oil ministry official told Reuters that Baghdad is now seeking Iran’s approval for additional shipments as the government works to protect oil revenues that account for roughly 95% of Iraq’s state budget. “Iraq is a close ally of Iran, and any deterioration in Iraq's economy would also damage Iran's economic interests in the country,” the official said. A second Iraqi official and a shipping industry source also confirmed ongoing negotiations with Tehran. At the same time, two LNG tankers carrying Qatari gas are reportedly en route to Pakistan under a separate understanding between Islamabad and Tehran, according to industry sources familiar with the matter. Pakistan previously received around 10 LNG cargoes each month before the conflict disrupted normal trade flows.

Sources said neither Iraq nor Pakistan made direct payments to Iran or the Islamic Revolutionary Guard Corps in exchange for transit access. Qatar was reportedly not directly involved in the bilateral arrangements but informed the United States before LNG shipments headed to Pakistan. Analysts warn that similar agreements with Iran could become more common as countries seek to secure energy supplies amid rising prices and shipping disruptions. Before the war, around 3,000 vessels passed through the Strait of Hormuz every month. Shipping traffic has now reportedly dropped to just 5% of previous levels.

The disruption has fueled a sharp rise in energy prices, with Brent crude climbing more than 50% since the conflict began in late February, while LNG prices in Europe and Asia have surged between 35% and 50%. Iran has stated it intends to maintain influence over the strait after the conflict ends and has reportedly demanded sanctions relief, reparations, and access to frozen assets as part of any future settlement.

Donald Trump dismissed those demands as ‘garbage’, dampening hopes for a broader diplomatic breakthrough. A Pakistani source involved in negotiations acknowledged difficulties in coordinating passage approvals. “The IRGC sometimes changes the goalposts, so it is hard to keep things on track, but we are working through it,” he said.

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