The ongoing conflict between Israel and Iran has triggered a sharp rise in global oil prices, posing serious risks to Pakistan’s trade and fiscal stability, according to a report by Ismail Iqbal Securities.
As of June 19, oil benchmarks have surged significantly: WTI at $76.42, Brent at $77.62, and Arab Light at $76.31 per barrel—up from early June levels of $60–63. The brokerage noted that the rally reflects a heightened geopolitical risk premium, driven by fears of major disruptions in global energy supply chains.
Iran, a key OPEC member and the third-largest producer in the bloc, currently pumps around 3.3 million barrels per day. With the strategic Strait of Hormuz—a vital passage for 18 to 21 million barrels per day—situated along Iran’s southern coast, escalating conflict raises the potential for a blockade or disruption, amplifying global market concerns.
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Pakistan, which is heavily dependent on energy imports, is particularly vulnerable. During 11MFY25, the country’s petroleum imports reached $14.6 billion, constituting 27% of the $53.5 billion total import bill. Earlier relief from lower oil prices had reduced external pressure, but the current price surge threatens to reverse these gains.
According to the brokerage, a $5 per barrel increase over the past year’s average could add $1 billion annually to Pakistan’s petroleum import bill. Although the country recorded a $1.8 billion current account surplus during 11MFY25—thanks in part to strong remittances—this financial buffer remains fragile.
“With oil prices continuing to rise, the threat to Pakistan’s economic outlook grows,” the note warned, adding that the trajectory of the Middle East conflict could play a decisive role in shaping the country’s near-term financial stability.
