- US-Iran conflict causes severe energy price shock for Pakistan.
- Pakistan’s weekly petroleum import bill surged 167 percent.
- Economic shock accelerates inflation, depletes reserves, weakens currency.
The conflict between the United States and Iran has triggered a severe energy price shock through Pakistan’s economy which is in dire straits with rising inflation, dwindling foreign exchange reserves and a fast depreciating currency.
According to an article in India Narrative, this is not merely a transient shock for Pakistan, one of South Asia’s most fragile states, but a structural blow to the economy. It points out that Pakistan is the “primary casualty” in the subcontinent of the US-Iran war.
The article highlights that Pakistan’s weekly petroleum import bill has surged 167 percent, from $300 million to $800 million, as the benchmark Brent crude surpassed $112 per barrel with the closure of the Strait of Hormuz driving freight costs and insurance premiums to historic highs.
It observes that the energy shock transmits across Pakistan’s macroeconomy leading to “accelerating inflation, current account deterioration, foreign exchange reserve depletion, currency depreciation, and a growing logistics crisis at Karachi port.”
The article observes that in April 2026, Prime Minister Shehbaz Sharif confirmed publicly that Pakistan’s weekly petroleum import bill had risen from $300 million to $800 million — an increase of 167 per cent within. This works out to an annual additional burden of around $26 billion, a figure that nearly matches Pakistan’s entire FY2025 merchandise export earnings of $29.8 billion. The country is, in effect, generating an import liability equal to its entire export sector — in a single commodity category — during a period of acute reserve stress.
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“Pakistan’s incremental annual oil burden now approaches its total export earnings. This is not a price adjustment — it is a stress event of structural proportions, exposing vulnerabilities that predate the current crisis by decades,” the article observes.
It highlights that 85 to 90 per cent of Pakistan’s petroleum requirements are met through imports, predominantly from Gulf states whose export logistics depend entirely on unimpeded Hormuz transit. The country has no comparable alternative supply option and no functioning strategic petroleum reserve.
This structural dependence generates what economists term a high pass-through environment: international oil price increases transmit rapidly and comprehensively into domestic fuel prices, transport costs, electricity tariffs, and consumer prices. The IMF estimates Pakistan’s CPI elasticity to oil at 0.4–0.6 per cent per 10 per cent price increase — among the highest in South Asia, the article added.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
