Iran has closed and re-opened the Strait of Hormuz several times since the US-Iran war began in February. When operating normally, ships transport about a fifth of global oil consumption through the chokepoint. Importantly, more than four-fifths of the oil and liquefied natural gas moving through Hormuz in 2024 was destined for Asia.
It was this over-dependence on Hormuz that has put Pakistan’s sleepy Gwadar port under the spotlight during the US-Iran war.
Six overland routes to Iran have helped move hundreds of stranded containers onward to China and Central Asia, three of which crossed from Gabd in Gwadar to Rimdan in Iran.
“The routes proved their value when traditional supply chains came under pressure,” Pakistan’s former ambassador to China, Naghmana Hashmi, tells Dialogue Earth. Hashmi played an important role championing the China-Pakistan Economic Corridor (CPEC) of which Gwadar port, in Balochistan’s Gwadar district, is a pivotal part.
The USD 62 billion CPEC links Kashgar in western China by road to Gwadar – around 600 km east of the Strait of Hormuz – as part of Beijing’s Belt and Road Initiative.
The Gwadar project, operated by a Chinese company under a 40-year lease, is envisioned as a trade hub linking a deep-sea port, airport, road network and a special economic zone.
Though it has been operational since the early 2000s, with the first ship berthed in 2008, the port had seen limited commercial activity since. Many dismissed it as a white elephant despite its strategic location near one of the world’s busiest energy corridors.
“Ports can take 50 to 100 years to mature,” Hashmi says, blaming Gwadar’s sluggish growth on the atmosphere of insecurity in Balochistan. “Pakistan failed to provide the environment investors needed despite China building the port and special economic zone,” she says.
But the tides are turning in Gwadar. With the port now on the global trade radar, former senator Mushahid Hussain Sayed urges Pakistan to market it to Central Asia.
“I can see huge opportunities for us with Iran – cheap oil, a gas pipeline and transit trade with Central Asia,” he tells Dialogue Earth.
“With Iran’s romance with India over and with our strained relationship with Afghanistan, we have an opportunity to use Gwadar to reach Central Asia via Iran,” chimes in Hashmi. “We must seize the moment!”
An Oil City revival?
Hormuz’s disruption had already offered a glimpse of what a more active Gwadar could look like.
“For the first time in over a decade, we received six transshipment cargoes,” the chairman of Gwadar Port Authority, Noor ul Haq Baloch, confirms to Dialogue Earth. He believes the port could become a major regional shipping hub within five years.
The port authority, he says, is considering the revival of a 100,000-acre (40,500-hectare) “Oil City”, highlighting Gwadar’s value as a “strategic storage site for Saudi Arabia and China”. The oil city is a proposed mega project in Gwadar district. The aim is to create oil refineries and petroleum product processing, predominantly sourced from the Persian Gulf area. These refined products are expected to serve both local and regional needs, with Saudi Arabia showing keen interest.
According to Shahid Ali, the director of town planning at the Gwadar Development Authority, there are plans to build the oil city between Pasni and Gwadar. “The requisition has come for 100,000 acres but so far, we have planned for 80,000 acres,” he tells Dialogue Earth.
A port official, requesting anonymity, says they doubt the oil city will take off despite strong Saudi interest. “Many such projects have been proposed before but never moved beyond paper. Security remains the main obstacle.”
According to Hashmi, under CPEC, Gwadar was envisioned as a petrochemical hub supplying China and powering industrial growth along the corridor.
Pakistan now has the opportunity to unlock Gwadar port’s long-term economic and strategic value, she adds.
As up to 85% of the country’s oil imports pass through Hormuz, even brief disruptions can cause inflation and hit industry and military logistics.
Gwadar may become an international storage facility for petrochemicals, but even for Pakistan expanding storage capacity is critical.
Pakistan holds only about 30 days’ worth of petroleum reserves, says Haneea Isaad, energy finance specialist at the Institute for Energy Economics and Financial Analysis (IEEFA). This is far below the 90-day benchmark considered necessary during geopolitical crises or wartime disruptions.
She critiques the intention to revive Oil City. “To me, it signals a continued reliance on petroleum. We may end up building even more storage as we go along,” Isaad says.
Pakistan could instead leapfrog its dependence on dirty fuels by electrifying transport fleets and other sectors, she adds.
Or a solar future
Like Isaad, energy expert Vaqar Zakaria, head of consulting firm Hagler Bailly Pakistan, favours solar-powered electrification. Gwadar’s location and recent tensions do not justify turning it into an oil hub, he tells Dialogue Earth. “Instead, falling solar panel and battery costs could enable towns like Gwadar to generate clean power locally, avoiding major grid investments,” Zakaria says.
He stresses the need for a sound “techno-economic” plan rather than a knee-jerk response to recent events, to avoid pitfalls that have long plagued Pakistan’s energy sector.
The oil city may take time, but Gwadar port’s special economic zone (SEZ) is ready and needs to be “populated”, says Hashmi.
According to Port Authority Chairman Baloch, the Gwadar SEZ is being aggressively promoted. “We’re offering 99-year leases and 23 years of tax-free manufacturing backed by improved road, power and water infrastructure.” Originally one of seven CPEC SEZs, Gwadar is now among 44, with 37 already notified.
Sayed says solar could help populate the SEZ. “Solarisation is an idea whose time has come, not because of any government policy, not because of any SEZ or any global initiative; it’s all about common sense – the need of people for a cheaper and cleaner energy alternative and its availability thanks to Chinese mass production,” he adds.
Pakistan’s Indicative Generation Capacity Expansion Plan 2025-35 has also recommended indigenisation of renewable energy technologies to save foreign exchange and reduce costs.
Solar’s share of Pakistan’s energy mix surged from 3% in 2020 to 33.2% by March 2026. In 2025, about 61% of electricity came from low-carbon sources, compared to a global average of 43%. And its oil and gas imports fell 40% between 2022 and 2024, according to the Centre for Research on Energy and Clean Air.
“Pakistan could end up exporting solar panels via Gwadar port; if we plan it properly and professionally,” says Sayed. “Renewable energy is the need of the hour!”
Sayed’s vision stands in stark contrast to the plans for an oil city, highlighting the debate over Gwadar’s future: solar panels or oil tanks, electric vehicles or petroleum storage, clean industry or fossil fuels.
The choices Pakistan makes today will shape the port for decades. After nearly two decades waiting for its moment, Gwadar is no longer short of opportunity. The question is whether Pakistan is ready to act on it in the long-term best interests of its people.
