Pakistan has faced the challenges of volatile global energy markets for a long time, which have hampered the country´s capacity to develop economically and ensure energy security.
Due to the disastrous Iran-US conflict and the effective closure of the Strait of Hormuz, Pakistan’s long-standing weakness has become a strategic advantage. This presents a once-in-a-lifetime chance for Pakistan to reshape its energy future and the regional trade architecture.
The eruption of hostilities between Iran, Israel and the United States brought the world to the brink of an economic catastrophe. The Strait of Hormuz, through which roughly 27 per cent of the world’s crude oil and petroleum products and 22 per cent of global LNG trade passes, was effectively severed as a commercial artery. Shipping traffic plummeted from 138 vessels daily to just three ships by March 2026. Insurance providers withdrew coverage entirely. The International Energy Agency described it as the greatest threat to global energy security in history. The cascade of consequences did not stop at energy prices. Global supply chains are fractured. Manufacturing slowed across three continents. And the illusion of invulnerability that had long protected the Gulf states was shattered.
Nowhere was this more devastatingly exposed than in the United Arab Emirates. The Iranian armed forces issued explicit warnings for the evacuation of Jebel Ali Port, Khalifa Port and Fujairah Port, declaring them legitimate targets. Jebel Ali, the busiest port in the Middle East, was struck on March 1, 2026, its operations grinding to a halt as smoke rose above Dubai’s skyline. The US military presence that was supposed to guarantee Gulf security proved to be a double-edged sword, and in some accounts, a mirage. The Gulf states now face a painful reckoning. They lack the capacity to protect their strategic assets without external help and have lost the interest of global investors and shipping companies. The route back to the same level of trust will be long and difficult. This is precisely where Pakistan enters the equation with an advantage that regional rivals cannot replicate. Pakistan possesses what the Gulf states desperately need but can no longer fully provide: secure, deep-water port infrastructure located outside the immediate battle radius of the Persian Gulf conflict. The Terminals facility at Karachi offers a quayside depth of 16 metres, enabling it to handle the largest vessels and compete directly with Jebel Ali, Salalah in Oman, and Mundra in India. Gwadar Port, a natural deep-sea harbour with a short 4.5-kilometre approach channel, sits strategically near the mouth of the Strait of Hormuz and is one of the deepest ports in the region with a depth capable of handling 16-metre draught cargo ships. A deep-water port is not merely a larger harbour. It changes the economics of trade in fundamental ways: it can handle fully loaded VLCs and ULVs without transhipment or lightening, it cuts transit times in half and it opens up direct trade routes that shallower ports can’t reach. The freight costs per ton drop dramatically, too.
To capitalize on this historic window, Pakistan must act with speed, strategic discipline, and legal sophistication. First, the government must expedite the development of strategic petroleum reserves and storage infrastructure. The proposed Pakistan Maritime Energy City at Gwadar, designed to provide storage for oil, LNG and LPG for both domestic use and re-export, must be commissioned following due diligence. Secondly, the ship-breaking industry at Gadani must be revived and modernized. Pakistan is currently the world’s third-largest ship-recycling centre, and with over 15,000 vessels expected to reach the end of their operational life over the next decade, the global market is projected to exceed $10–12 billion annually. The ministry has already committed to a Rs 12 billion modernization programme, but full compliance with the Hong Kong International Convention is essential to regain international market access. Thirdly, and most critically, Pakistan must overhaul its legal and regulatory framework to attract foreign investment. The contractual and licensing processes must be shortened and streamlined, with clear, investor-friendly policies that offer certainty without onerous bureaucracy. Yet here a cautionary note is essential. Contracts must be carefully scrutinized, with transparent competitive bidding, robust oversight mechanisms, and favourable yet balanced, dispute resolution, termination and force majeure clauses that protect Pakistan´s sovereignty and economic interests. To negotiate such contracts, special legal expertise must be utilized; engaging those who have negotiated such deals earlier. The regional security landscape provides the tailwind. The Gulf states, having witnessed the limitations of their security dependence on external powers, are likely to seek new partnerships. Kuwait has already shown early interest in developing strategic buffer storage facilities at Gwadar and Saudi Arabia’s long-delayed refinery projects may finally gain momentum. As confidence in UAE-based storage erodes, Pakistan has a compelling story to tell: secure geography, functional deep-water ports, a workforce with maritime experience and a government serious about energy logistics.
The pathway forward is clear but demanding. Pakistan must urgently enact maritime sector reforms, accelerate HKC compliance for Gadani, finalize the Energy City project after due deligence with transparent international bidding, develop strategic oil reserves and, above all, cultivate a reputation for contractual reliability and in house dispute resolution. The war in the Gulf will end eventually, but the trust that has been broken may never fully return to ports like Jebel Ali. Pakistan now faces a moment that comes once in a generation. Whether it seizes this opportunity or watches it slip away will determine not only its energy security but its place in the global economy for decades to come.
—The writer is an international law expert and an internationally accredited arbitrator and mediator.
