Pakistan, Iraq strike Iran-backed energy transit deals as Hormuz control tightens

Pakistan and Iraq have separately concluded arrangements with Iran to facilitate the shipment of crude oil and liquefied natural gas through the Strait of Hormuz, according to five sources familiar with the matter, underscoring Tehran’s growing role in regulating energy flows through the strategic waterway.

The agreements come as the US-Israeli conflict with Iran has disrupted regional energy exports from a zone that typically supplies around 20% of global crude oil and LNG, with shipping routes severely constrained in recent weeks.

Sources said Iran initially sought to halt traffic through Hormuz but has since shifted toward a model of controlled access, with analysts describing the strait as increasingly operating under a managed corridor system rather than an open transit route.

“Iran has shifted from blocking Hormuz to controlling access to it… it is no longer a neutral transit route,” said Claudio Steuer of the Oxford Institute for Energy Studies.

Under a previously unreported arrangement, Iraq secured safe passage for two very large crude carriers transporting around 2 million barrels each, which transited the strait on Sunday.

Iraqi officials said Baghdad is now seeking further approvals from Tehran to ensure continued transit, as oil revenues account for roughly 95% of the country’s budget and any disruption poses major fiscal risks.

Separately, Pakistan is also moving under a bilateral understanding with Iran to facilitate LNG deliveries from Qatar, with two tankers reportedly en route under a coordinated arrangement linked to the broader Gulf energy supply chain.

Pakistan, which previously received around 10 LNG cargoes per month before the conflict escalation, is now under pressure to meet rising electricity demand during peak summer conditions.

Sources said Qatar was not directly involved in the bilateral arrangements but informed the United States ahead of shipments destined for Pakistan.

Neither Iraq nor Pakistan is reported to have made direct payments to Iran or the IRGC for transit approvals, according to the sources.

Industry participants said similar arrangements are being explored by other countries as energy price volatility and supply disruptions intensify, particularly across Asian markets.

Before the disruption, roughly 3,000 vessels transited Hormuz monthly, but current flows have reportedly dropped to around 5% of normal levels, according to shipping data cited by sources.

The crisis has driven sharp price increases, with Brent crude rising more than 50% since late February, while LNG prices in Europe and Asia have increased by 35% to 50%.

Iran has reportedly signalled that it intends to retain a supervisory role over the strait after the conflict, seeking sanctions relief, reparations and access to frozen assets as part of any settlement.

Sources also said Tehran has begun requiring detailed documentation for each vessel, including cargo, ownership and destination, with Iraqi oil ministry teams coordinating submissions to facilitate passage.

A Pakistani source involved in negotiations said the process remains uneven, noting that Iranian approval mechanisms can shift, creating operational uncertainty for shipments passing through Hormuz.