ICYMI – Iran tightens Hormuz grip as Iraq and Pakistan strike bilateral transit deals
Iraq and Pakistan have struck separate deals with Iran for oil and LNG passage through the Strait of Hormuz, as Tehran formalises control of the waterway with vessel traffic at 5% of pre-war levels. Reuters carried the report.
Summary:
- Iraq secured Iranian approval for two very large crude carriers, each carrying around 2 million barrels, to pass through the Strait of Hormuz on Sunday, per five sources cited by Reuters
- Pakistan secured passage for two Qatari LNG tankers under a separate bilateral agreement with Tehran, with Qatar informing the US ahead of the shipments, according to Reuters sources
- Neither Iraq nor Pakistan made direct payments to Iran or the IRGC for the transit approvals, per the sources
- Vessel traffic through Hormuz has fallen to around 5% of its pre-war level of approximately 3,000 ships per month, according to shipping data cited by Reuters
- Brent crude has risen more than 50% since the conflict began in late February, with European and Asian LNG prices up 35% to 50%, per Reuters
- Iran is formalising its control over the strait by requiring detailed vessel documentation from Iraq for each tanker, routed via designated maritime corridors under Iranian naval supervision, according to an Iraqi oil ministry official
Iraq and Pakistan have secured energy transit agreements with Iran, allowing crude oil and liquefied natural gas shipments to pass through the Strait of Hormuz, in deals that underscore Tehran’s growing control over one of the world’s most critical energy chokepoints.
Iraq arranged safe passage for two supertankers carrying a combined 4 million barrels of crude through the strait on Sunday, in a deal that had not been previously reported. Baghdad is now seeking Iranian approval for additional transits, driven by the urgency of protecting oil revenues that account for 95% of its national budget. Separately, Pakistan secured passage for two Qatari LNG cargoes under its own bilateral arrangement with Tehran, as the country faces peak summer electricity demand. Qatar informed Washington ahead of the shipments, though it was not a direct party to the deal.
Neither country made payments to Iran or its Revolutionary Guard Corps in connection with the transit approvals. Iran has instead required Iraq to submit detailed vessel documentation for each tanker, including cargo, ownership and destination information, with shipments routed through designated corridors under Iranian naval oversight.
Analysts described the development as a significant shift in the nature of the Hormuz crisis. Rather than seeking to close the strait entirely, Iran appears to have moved toward managing access to it selectively, a posture that effectively converts the waterway into a tool of geopolitical leverage. Other countries are reportedly exploring similar arrangements, raising concern that bilateral deal-making could normalise Iranian control on a semi-permanent basis.
Vessel traffic through Hormuz has collapsed to around 5% of pre-war levels. Brent crude has surged more than 50% since the conflict erupted in late February, while LNG prices in Europe and Asia have jumped between 35% and 50%. Iran has stated it intends to retain strategic control of the strait beyond any eventual ceasefire.
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Iran’s formalisation of control over the Strait of Hormuz represents a structural shift in global energy risk pricing, moving the market from an acute blockade scenario toward a longer-duration managed access regime that is harder to resolve through diplomacy or military pressure. With vessel traffic at roughly 5% of pre-war levels and Brent already up more than 50% since the conflict began, any further normalisation of Iran’s gatekeeper role risks embedding a sustained risk premium into crude and LNG pricing. The spread of bilateral transit deals to additional Asian economies would incrementally legitimise Tehran’s position, complicating US-led efforts to maintain pressure on Iran and potentially reducing the incentive for a broader settlement.
This article was written by Eamonn Sheridan at investinglive.com.