Pakistan, Iraq Secure Iranian Approval for Energy Shipments Through Strait of Hormuz

Amid a conflict and U.S. blockade, Iran is selectively allowing Pakistan and Iraq to transport energy through the critical Strait of Hormuz.

This gives Iran significant leverage, as the strait is a major chokepoint for about 20% of the world's oil and LNG supply.

These limited 'safe passage' deals could slightly ease energy market pressures, but the situation remains highly volatile and dependent on geopolitical tensions.

Pakistan and Iraq have secured special permission from Iran to move energy supplies through the highly contested Strait of Hormuz.

This development is happening against the backdrop of a hot conflict and a U.S. naval blockade, making any passage through the strait extremely risky. The Strait of Hormuz is no ordinary waterway; it's a critical chokepoint through which about 20% of global oil and a similar share of LNG travels. By granting these exemptions, Iran is essentially acting as a gatekeeper, deciding who gets to pass and who doesn't, thereby demonstrating its regional influence.

So, how did we get here? The chain of events is quite clear. First, the U.S. imposed a naval blockade on Iranian ports in April, which sharply escalated tensions. In response, Iran announced the strait's closure, bringing most commercial traffic to a halt. This created immense pressure on neighboring countries like Iraq, which exports most of its crude oil through this route and had to declare force majeure on some oil fields.

Second, the risk factor skyrocketed. Insurers added the region to their high-risk lists, causing war-risk premiums to surge. Without insurance or a guarantee of safe passage, shipping becomes nearly impossible. This situation pushed Iraq and Pakistan, both heavily dependent on this route, to negotiate directly with Tehran for special 'carve-outs'. A successful test run in early May, where Iran cleared a Qatari LNG tanker headed for Pakistan, paved the way for these formal agreements.

These deals are a pragmatic solution for Iraq and Pakistan to maintain their vital energy flows. For the global market, even a small resumption of shipments can influence oil price expectations. If Iraq restores even a fraction of its exports, it could introduce a material amount of supply back into the market. However, the situation remains fragile. Any re-escalation could instantly reverse this progress, making these selective openings a tense and closely watched geopolitical drama.

Strait of Hormuz: A narrow, strategically important strait between the Persian Gulf and the Gulf of Oman. It is the world's most important oil transit chokepoint.
LNG (Liquefied Natural Gas): Natural gas that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport.
Force Majeure: A common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs.

Pakistan, Iraq Secure Iranian Approval for Energy Shipments Through Strait of Hormuz

Amid a conflict and U.S. blockade, Iran is selectively allowing Pakistan and Iraq to transport energy through the critical Strait of Hormuz.

This gives Iran significant leverage, as the strait is a major chokepoint for about 20% of the world's oil and LNG supply.

These limited 'safe passage' deals could slightly ease energy market pressures, but the situation remains highly volatile and dependent on geopolitical tensions.

Pakistan and Iraq have secured special permission from Iran to move energy supplies through the highly contested Strait of Hormuz.

Strait of Hormuz: A narrow, strategically important strait between the Persian Gulf and the Gulf of Oman. It is the world's most important oil transit chokepoint.
LNG (Liquefied Natural Gas): Natural gas that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport.
Force Majeure: A common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs.