ISLAMABAD – Pakistan’s economy may face significant financial strain if the ongoing Middle East conflict persists and global oil prices continue to rise, officials informed the National Assembly Standing Committee on Finance.
During the briefing, lawmakers were told that international crude oil prices have already surpassed $123 per barrel amid uncertainty linked to the conflict. Consequently, petroleum product prices in Pakistan have increased by up to 42 percent in recent months.
Officials highlighted that the country is currently bearing an additional cost of approximately $70 million per day due to higher oil prices, which has raised the import bill by nearly $4 billion over the past two months.
At present, the economy is projected to incur annual losses between $10 billion and $12 billion. However, if the conflict continues, economic losses over the next three months alone could range from $24 billion to $32 billion.
In a worst-case scenario, where oil prices reach $150 per barrel and the conflict is prolonged, annual losses could escalate to as much as $50 billion, depending on the intensity and duration of the situation.
The committee was further informed that rising global oil prices could adversely affect exports, slow remittance inflows, and accelerate inflation. Transport fares have already increased between 40 percent and 100 percent, while higher fuel costs are raising operational expenses for businesses.
Officials cautioned that the full impact of the crisis is likely to become evident in the next quarter, potentially affecting overall macroeconomic stability.
Energy supplies have also been impacted, as disruptions in RLNG imports from Qatar and delays in furnace oil shipments have heightened the risk of electricity shortages, leading to load shedding in Islamabad and other areas.
The committee also expressed concern over the country’s growing public debt. Finance Ministry officials noted that although the legal debt limit is set at 60 percent of GDP, Pakistan’s debt-to-GDP ratio has risen to nearly 70 percent.
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