Pakistan and Asia’s energy security: lessons from US-Iran conflict

Pakistan's diplomatic efforts to foster communication between the United States and Iran are often analyzed through a geopolitical lens. However, a different perspective reveals their role in safeguarding Asia from a potential energy crisis. The Strait of Hormuz, a key maritime route, has seen a significant reduction in oil and petroleum product flows during the conflict.

While the Strait typically handles 21.6 million barrels a day, it dropped to 4.9 million barrels a day in the second quarter of 2026, a 14% decrease from the previous year. This decline has had widespread effects across Asia, with Asian crude imports dropping to 23.12 million barrels a day in August 2026, compared to the pre-conflict average of 26.91 million barrels a day.

The vulnerability of Asia's energy security is highlighted by the concentration of imports through the Strait of Hormuz. Pakistan, in particular, faces a serious risk as 81% of its fuel imports come from Gulf Cooperation Council countries, and 55% of its annual remittances, amounting to 9% of its GDP, are sourced from these economies.

Similarly, Pakistan's liquefied natural gas (LNG) supply is heavily reliant on Qatari projects, with 7.5 million tonnes out of its 8.4 million tonnes per year covered by medium- and long-term LNG contracts. This dependency on Gulf energy routes makes energy security a crucial economic concern for Pakistan, rather than just a foreign policy matter.

Pakistan's economic interest in regional stability stems from the potential double exposure it faces. Higher energy costs could lead to weaker external inflows, increasing the country's fiscal burden and making it challenging for businesses and households to cope with higher prices. The International Monetary Fund (IMF) has warned that sustained disruption to physical fuel supplies could have a more significant impact on Pakistan's economic activity than higher international prices alone.

Such disruptions would raise the cost of imported fuel and freight, increasing the landed cost of energy, putting pressure on the import bill, and potentially leading to greater inflationary pressure, weaker industrial margins, and slower investment.

For an economy managing its external financing needs, this is not merely an energy issue but a balance-of-payments risk. The IMF has emphasized Pakistan's broader exposure to the Gulf, noting that a significant disruption to GCC economies could affect remittances, a vital source of financing for consumption and the balance of payments.

Thus, Pakistan's role extends beyond delivering a final settlement between Washington and Tehran; its contribution is more economically important in maintaining open communication and supporting efforts to reduce the risk of prolonged disruptions to regional energy flows.

Pakistan is beginning to address its vulnerability to this energy security challenge. The country's largest oil refiner, Cnergyico, has increased its US crude imports in response to the current disruption. It imported approximately 8.1 million barrels of US crude over nine months, including about 7.1 million barrels valued at $750 million during the fiscal year ended June 2026.

Cnergyico is also contemplating further purchases and plans to add a second offshore mooring as part of a broader upgrade. These steps are not meant to replace Pakistan's existing Gulf energy relationships but rather to create a more resilient approach that includes alternative suppliers, adequate storage, and additional transport routes to provide flexibility when normal trade is disrupted.

The crisis underscores that energy security is increasingly viewed as a comprehensive system encompassing reserves, pipelines, ports, shipping capacity, insurance, and cross-border coordination. Pakistan's efforts to keep communication open and support measures that minimize the risk of prolonged disruptions to regional energy flows demonstrate its broader economic interest in regional stability.

The experience of Asia serves as a valuable lesson, highlighting the need for a more holistic energy security strategy that extends beyond just securing supplies from various suppliers.