Pakistan’s Iran border closure disrupted LPG supplies, exposed energy vulnerabilities, and highlighted the risks of sanctions and trade restrictions.
On October 3, Pakistan's Ministry of Commerce (MoCom; وزارت تجارت) issued a memorandum extending a waiver on the electronic import form, or E-Form, for goods arriving from Iran. Thirteen days later, on October 16, a second memorandum withdrew the October 3 order "with immediate effect", and it did so without specifying a reason. No road was formally shut. From October 17, cargo stopped moving through the two official crossings at Gabd-Rimdan and Taftan in Balochistan, while passengers at Gabd-Rimdan kept crossing.
The stoppage ended, in part, a week later. Gabd-Rimdan reopened on Saturday, October 24, "after a weeklong suspension that began on Oct 17," though only for consignments whose paperwork was dated October 16 or earlier. Short as it was, the episode worked as an unplanned stress test. Pakistan's recorded trade with Iran is small, under 2 percent of its imports by the official count, yet the week showed that the exposure sits in a few flows that are hard to replace, chiefly liquefied petroleum gas (LPG) at a time when seaborne liquefied natural gas (LNG) has been disrupted, and imported electricity for the Makran coast. Because the banking channel to Iran closed years ago, those flows run on administrative waivers, and every lever Islamabad pulls for security or sanctions compliance carries an immediate domestic price.
Since the memorandum itself gave no reason, the explanation fell to officials, and their accounts did not match. Shahid Rind, an adviser to the Balochistan chief minister, said the purpose was to "address security concerns, prevent smuggling, and make the border system more effective." Bakhtiar Ismail, the deputy commissioner of Chagai district, where Taftan lies, called it "a temporary measure to improve border management to support counterterrorism efforts." Esmaeil Baghaei, the spokesman for Iran's foreign ministry, cited "certain technical issues and the necessity of implementing precautionary measures." Sajjad Haider Khan, the spokesman for Pakistan's Foreign Office, said Pakistan "adheres to and shall continue to adhere to all applicable sanctions regimes," and said he had no direct knowledge of the situation on the ground. The Ministry of Commerce did not respond to requests for comment.
Tehran's version, offered a week into the stoppage, placed the problem squarely in Pakistan's paperwork. Reza Amiri Moghadam, Iran's ambassador in Islamabad, said on October 25 that "there are no restrictions on the Iranian side on the export of Iranian goods to Pakistan, including LPG." He blamed "changes in the implementation of Pakistan's E-Form procedure" for leaving traders "effectively and literally unable to dispatch cargo," and said several hundred LPG trucks had crossed into Gabd without being unloaded or cleared. Consultations, he added, were underway. Each government, in effect, located the cause on the other side of a single document.
Whatever the cause, what the reopening restored is narrower than the word suggests. Gabd-Rimdan had already reopened on October 21 for Pakistani exports of perishable goods. From October 24, a customs clearing agent at Gabd reported clearing 28 trucks of rice and other food bound for Iran. Businessmen in Balochistan said only vehicles with paperwork prepared before October 16 were being allowed through, and Mir Naveed Jan Kalmati, president of the Gwadar Chamber of Commerce and Industry, put the backlog at "three to four thousand trucks on the Iranian side and two to three thousand trucks on the Pakistani side." The reopening also followed a security review by local administrators after an attack on stranded trucks near the closed crossing on October 22. The status of each flow on October 26 is set out below.
Table 1: Trade at the two official crossings, status as of October 26, 2026
| Flow | Status | Source |
|---|---|---|
| Passenger traffic, Gabd-Rimdan | Continued during the cargo suspension | Iranian news agency report, as cited |
| Pakistani exports, Gabd-Rimdan | Perishables allowed from October 21; trucks of rice and other food clearing from October 24 | Traders and a customs agent |
| Imports, Gabd-Rimdan | Resumed October 24 for consignment notes dated October 16 or earlier | Report of the reopening |
| Imports, Taftan | Trade "temporarily restored" from October 24, according to an LPG importer | Traders' account |
| Pakistani exports, Taftan | Still suspended as of October 25 | Traders' account |
| Cargo with paperwork dated after October 16 | Not reported as cleared; businessmen say only earlier paperwork is accepted | Businessmen in Balochistan |
| E-Form waiver for Iranian imports | Withdrawn October 16; no public restoration found as of October 26 | Memorandum as described |
| Iranian side | Ambassador says no restrictions on exports to Pakistan, including LPG | Ambassador's statement |
Its rows point to the date on the paperwork, more than the state of the gate, as the binding constraint, since the gate opened for anything carrying an early enough date. A document can stop a trade only if the trade depends on it, and the E-Form explains why this one does. The form exists "to record imports and their payment through banks." For most trading partners, that is routine. For Iran, the bank leg has been missing for years. The State Bank of Pakistan (SBP) publishes import payments by country, and its archive shows payments to Iran peaking at $1.02 billion in fiscal year 2009-10 (July–June), shrinking to a few hundred thousand dollars a year by the mid-2010s and stopping altogether after May 2018, the last month with a nonzero entry. The current table records zero for Iran in fiscal year 2025-26 and again for July–September 2026. The chart below traces the full series.
A zero in the bank ledger would mean zero trade only if that were the sole ledger, and the customs data say otherwise. The Pakistan Bureau of Statistics (PBS) recorded imports from Iran of Rs182,103 million in July–December 2025, equal to 1.87 percent of Pakistan's total imports. Converting at the exchange rate implied by the same report's totals gives a dollar value:
Roughly $646 million of goods arrived in six months against a banking record of nothing. The comparison is no smuggling estimate, since the two series count different things. It describes a trade that is recorded at the border with no matching payment through Pakistan's banks, which is the kind of arrangement a waiver on a bank-linked import form would accommodate.
Other ledgers put the trade higher still, and they disagree with one another almost as much as with the bank data. The table sets them side by side. Periods and definitions differ, so the figures cannot be added or netted against one another.
Table 2: One trade, several ledgers (periods and definitions differ; not additive)
| Measure | Period | Value | Source |
|---|---|---|---|
| Total bilateral trade, Federation of Pakistan Chambers of Commerce and Industry estimate | Fiscal year 2023–24 | About US$2.8 billion, including about US$684 million of Pakistani exports | Federation estimate as reported |
| Iran's non-oil exports to Pakistan, Islamic Republic of Iran Customs Administration (IRICA) | Iranian year to March 20, 2025 | US$2.4 billion; Pakistan was Iran's fifth-largest destination | IRICA deputy head |
| Imports from Iran, Pakistan Bureau of Statistics (PBS) customs data | July–December 2025 | Rs182,103 million (about US$646 million); 1.87% of imports | PBS quarterly review |
| Iranian exports to Pakistan, Pakistani commerce ministry data as reported in Iran (secondary) | January–June 2026 | US$750 million, against US$580 million a year earlier | Iranian newspaper report |
| Import payments to Iran through banks, State Bank of Pakistan (SBP) | Fiscal year 2025–26; July–September 2026 | US$0 in both periods | SBP payments table |
Even with those caveats, the spread is instructive. Annualized, the PBS figure comes to about $1.3 billion, little more than half of what Iran's customs agency reported for an earlier year, and the $2.8 billion estimate of the Federation of Pakistan Chambers of Commerce and Industry sits above both. A trade measured this loosely is hard to manage by rule, which helps explain why it has been managed by waiver.
The absence of a bank channel is a sanctions fact, and the summer of 2026 showed how quickly the edges of that regime can move. On June 22, the US Treasury's Office of Foreign Assets Control (OFAC) issued General License X, which authorized transactions "ordinarily incident and necessary to the production, sale, delivery, or offloading of crude oil, petrochemical products, or petroleum products of Iranian origin" until August 21. On July 7, OFAC revoked it and substituted General License X1, which allowed only wind-down activity until July 17 and did not authorize "any new transactions." A Federal Register notice on September 30 recorded that X1 had expired. No reporting links either license to Pakistan's overland trade. The sequence still shows how brief a licensed window for Iranian petroleum products can be, in this case 15 days from issue to revocation.
That brevity matters most for LPG, the flow the border week disrupted first. The Pakistan LPG Association says the country imports about 7,000 metric tons of LPG a day from Iran, and Shamsul Haq, a former president of the Gwadar chamber, put Gabd-Rimdan's share at more than 4,000 tons a day. The arithmetic of a one-week interruption follows from those two figures:
More than half of the Iranian supply depended on one crossing, and a week's stoppage put up to 49,000 tons of the fuel in doubt. These are association and trader figures. PBS publishes the value of LPG imports but not their quantity or origin, so no official series can yet confirm them.
Prices moved faster than anyone could count the missing tons. Traders said a 12-kilogram cylinder rose to Rs7,000 (about $25) from Rs4,500 (about $16) "within days." The Oil and Gas Regulatory Authority (OGRA; اوگرا) had set the October ceiling at Rs279.34 per kilogram, or Rs3,296.23 for an 11.8-kilogram domestic cylinder. On a per-kilogram basis, the reported Balochistan price stood at about twice the regulated one:
Applying the same calculation to the other prices reported by Irfan Khokhar, the association's chairman, produces the comparison below.
Table 3: Reported LPG prices against the regulated ceiling, October 2026
| Price point | Reported price | Per kilogram | Multiple of OGRA ceiling | Source |
|---|---|---|---|---|
| OGRA ceiling, October 1–31 | Rs 3,296.23 per 11.8-kg cylinder | Rs 279.34 | 1.00 | OGRA notification as reported |
| Market, before the stoppage | Rs 4,500 per 12-kg cylinder | Rs 375 | 1.34 | Traders |
| Balochistan, October 23 | Rs 7,000 per 12-kg cylinder | Rs 583 | 2.09 | Pakistan LPG Association chairman |
| Lahore, October 23 | Rs 7,500 per 12-kg cylinder | Rs 625 | 2.24 | Pakistan LPG Association chairman |
| Skardu, October 23 | Rs 8,200 per 12-kg cylinder | Rs 683 | 2.45 | Pakistan LPG Association chairman |
The first market row carries the less obvious lesson. Even before the stoppage, the reported market price was about a third above the ceiling, which suggests the regulated price was already more of a reference point than a price most buyers paid. The border week widened a gap that existed before it. The Gwadar chamber said the closure was "disrupting the national LPG supply chain, and causing prices to skyrocket," and Khokhar said higher LPG prices were feeding through to other goods. OGRA's November notification, expected at the end of October, will show whether the ceiling moves toward the market.
A disruption to one fuel at one crossing bites harder when the wider energy import picture is considered. PBS's monthly trade files show Pakistan's LNG imports falling to zero in April 2026 and, in September, standing 74 percent below a year earlier at $54.2 million. LPG imports from all origins moved the other way, reaching $109.8 million in September, 35 percent above September 2025. The timing coincides with the war on Iran that began on February 28 and the shipping disruptions in the Strait of Hormuz, although the trade files record values and say nothing about causes. The chart shows both series month by month.
Divergence on this scale cannot establish that Iranian LPG replaced LNG, because the two fuels serve partly different users and PBS does not split LPG by origin. What it can establish is that LPG became a larger share of the energy import bill in the very months when the overland route mattered most. Electricity is the second flow for which Iran supplies something Pakistan cannot easily source elsewhere, and there the dependence is documented by the regulator itself.
The regulator's record begins with capacity. In May, the National Electric Power Regulatory Authority (NEPRA) approved amendments to a 2002 agreement under which Iran supplies power to the Makran coast, adding 100 megawatts (MW) to the existing 104 MW for a total of 204 MW. According to reports of the decision, the national grid supplies only 40–45 MW continuously to Gwadar, and NEPRA acknowledged that Makran has no immediate alternative to imported Iranian electricity.
Contracted capacity, however, has not meant reliable supply. A planning report on Gwadar submitted to NEPRA in April found, as reported from the document, that imports from Iran were completely unavailable for 130 hours in 2024 and 246 hours in 2025, and that supply shortages affected the system 21 percent of the time in 2024 and 26 percent in 2025. The main figures are gathered below.
Table 4: Makran's electricity dependence on Iran
| Indicator | Value | Source |
|---|---|---|
| Iranian supply under the existing arrangement | 104 MW | NEPRA decision as reported |
| Additional Iranian supply approved May 13, 2026 | 100 MW (total 204 MW) | NEPRA decision as reported |
| Continuous national grid supply to Gwadar | 40–45 MW | NEPRA decision as reported |
| Hours Iranian imports were completely unavailable | 130 (2024); 246 (2025) | Planning report as reported |
| Share of time the system was short of supply | 21% (2024); 26% (2025) | Planning report as reported |
| Maximum stable grid supply even after planned upgrades | 73 MW | Planning report as reported |
| Cost of a new 220-kV transmission link | More than US$500 million | Planning report as reported |
| Proposed local plant | 40 MW, target July 2027 | Planning report as reported |
| Tariff for Iranian power | Base 3.6 US cents/kWh plus an oil-price link; about 8.4 cents at US$60 oil | NEPRA decision as reported |
Those figures describe a coast that draws most of its nominal supply from Iran and still goes short about a quarter of the time. Planners judged a new transmission link costing more than $500 million to be unjustified at current demand and proposed a 40 MW local plant able to run in "island mode," targeted for July 2027. Until that plant exists, Makran's power depends on a cross-border arrangement exposed to the same political weather as the LPG trucks, even though no report indicates that electricity flows were affected in October.
Beside these two working flows sits a third, the gas pipeline, which has delivered nothing and carries the largest claim. Under a 2009 gas sales agreement, Pakistan's 781-kilometer section of the Iran–Pakistan pipeline was due by December 2014, Petroleum Minister Ali Pervaiz Malik told the Senate in August; US sanctions and a lack of financing stalled it while Iran completed its side. Iran initiated arbitration in September 2024 and is seeking $18 billion, a claim that has not been adjudicated. Pakistan has sought an extension to 2035, a verdict is expected in 2027-28, and a high-level committee is pursuing a negotiated settlement. Any new restriction on Iranian trade therefore sits beside a dispute in which the price of the sanctions era already carries a number, even if only as a claim.
Those exposures sit inside a macroeconomic picture that magnifies each of them without being caused by any of them. On October 26, the SBP raised its policy rate by 50 basis points to 12 percent, effective October 27, citing the "intensification in the Middle East conflict" and its effect on energy prices, along with domestic wheat supply frictions. September inflation was 10.3 percent, and the one dissenting member favored a larger increase, according to the governor. The statement does not mention Iran, LPG or the border, and it should not be read as a response to them. It does mean that a price shock at the border lands in an economy where the central bank is already tightening against energy-led inflation.
Against that backdrop, Islamabad's difficulty is that each motive offered for the stoppage is plausible and each carries a cost. Security and anti-smuggling aims are the stated ones, while sanctions compliance is implied by the Foreign Office's language. Some analysts have gone further. Imtiaz Baloch, a security analyst who focuses on Balochistan, said in an interview that the US policy of maximum pressure on Iran had a direct or indirect influence, while acknowledging that no concrete or visible statement had linked the closure to US policy. "My assessment is that security is part of it, procedures or technical glitches are part of it and the banking system is also involved," he said. Pakistan is meanwhile trying to mediate between Washington and Tehran, and its army chief, Field Marshal Asim Munir, was due in Tehran on October 26, his second visit in less than a week.
If those pressures are likely to recur, the useful question is what would make the next stoppage cheaper. One option is to settle openly what documentation regime applies to Iranian goods and to publish the reason whenever it changes, since a waiver that can be withdrawn overnight by memorandum gives the state flexibility and gives traders none. Another is to treat the concentration of LPG supply at a single crossing as an energy-security question, which points toward storage and a wider spread of import sources rather than toward the border alone.
The electricity and pipeline exposures need longer horizons than any trade order. Gwadar's local plant has a July 2027 target, and until it runs, every month of delay extends the period in which a decision about trucks could become a decision about the coast's power supply. The arbitration timetable runs to 2027-28, and settlement terms, if reached, will define how much of the pipeline's cost Pakistan carries regardless of what happens at Gabd.
Whether any of this changes will be visible soon. Over the next few weeks, the most telling signals will be whether the E-Form waiver is restored or replaced, when Pakistani exports resume at Taftan, whether cargo with paperwork dated after October 16 is allowed to move, and where OGRA sets the November ceiling. A week was enough to show that the border can close in Islamabad's paperwork while the gates stand open. Whether the next decision of that kind is priced before it is signed depends on choices that have not yet been made.
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