Pakistan’s proposal to install China as a guarantor for the US-Iran deal is a pivotal move aimed at securing lasting regional stability.
At the heart of this issue is the Strait of Hormuz, a vital artery for global energy. Roughly one-fifth of the world's petroleum and liquefied natural gas (LNG) passes through this narrow waterway. Recent tensions, including ship seizures and blockades, have turned the strait into a conflict meter, causing oil prices to fluctuate wildly. Any long-term agreement, therefore, must include enforceable guarantees for safe passage.
This is where China enters the picture, for three key reasons. First is economic leverage. As Iran's largest oil customer and a crucial trade partner, Beijing possesses powerful economic tools. It can offer continued trade as an incentive for compliance or threaten to curtail it as a punishment, giving real teeth to any agreement. Pakistan alone lacks this kind of influence over Tehran.
Second, there is a diplomatic precedent. China successfully brokered a normalization deal between regional rivals Saudi Arabia and Iran in 2023. This demonstrated its unique ability to engage with both sides and established its credibility as a mediator in the region. Pakistan is now trying to formalize this proven influence into a guarantor role.
Finally, the move has a degree of US political acceptability. Washington wants to de-escalate the conflict without rewarding Iran's actions. Recently, US officials noted that China committed not to provide “material support” to Iran. This has created an opening for a carefully defined role for China as an “economic enforcer” rather than a military ally, a practical solution to keep the peace and reopen Hormuz.
The urgency for a strong guarantor became clear over the past few months. A temporary ceasefire in April, mediated by Pakistan, caused Brent crude prices to fall over 13% in a single day. This showed how much of a 'risk premium' was baked into oil prices. However, the truce remained fragile, proving that a simple paper agreement was not enough to ensure stability. Pakistan's insistence on a Chinese guarantor is a direct response to this reality, aiming to lock in the ceasefire with a power that can ensure compliance.
- Strait of Hormuz: A narrow waterway between the Persian Gulf and the Gulf of Oman, through which a significant portion of the world's oil supply passes.
- Risk Premium: Additional return an investor expects for holding a risky asset compared to a risk-free one. In oil, it refers to higher prices due to geopolitical instability.
- CPEC: The China-Pakistan Economic Corridor, a collection of infrastructure projects under construction throughout Pakistan since 2013.