Pakistan’s economy could suffer heavy losses if oil prices keep rising due to the ongoing Middle East conflict. Officials briefed the National Assembly Standing Committee on Finance that annual losses may range from $10 billion to as high as $50 billion if global oil prices reach $150 per barrel.
Pakistan imports most of its oil needs. The country uses about 440,000 barrels per day but produces only around 80,000-90,000 barrels locally. This means it relies on imports for nearly 80% of its oil, much of which comes through the Strait of Hormuz in the Middle East.
International oil prices have already climbed above $123 per barrel amid uncertainty from the conflict. In Pakistan, petroleum prices have surged by up to 42% in recent months. The weekly oil import bill has jumped sharply from about $300 million before the crisis to around $800 million now.
Higher oil costs bring multiple problems. The oil import bill rises quickly, putting pressure on foreign exchange reserves and widening the current account deficit. Transport and energy costs go up, which increases the price of almost everything and fuels inflation. Experts warn that in a severe case, inflation could reach 17%. Exports may fall, and remittances could also drop as global conditions worsen.
Prime Minister Shehbaz Sharif has noted that the crisis has reversed some recent economic gains. The government is trying to manage fuel consumption and seeking ways to reduce its impact. However, with limited oil reserves, Pakistan remains highly vulnerable to global price shocks.
To reduce risks, experts suggest diversifying energy sources, increasing local production, and using more renewable energy like solar and wind.
