Costlier oil may strain IMF targets and the current account.
TARIQ KHATTAK
ISLAMABAD
Pakistan Business Network President Omar Butt has warned that an attack on Iran could immediately raise global crude oil prices by up to $20 per barrel, placing severe pressure on developing economies and directly threatening Pakistan’s economic recovery.
In a statement, he said that around 25 to 30 percent of the world’s crude oil supply and nearly 20 percent of liquefied natural gas (LNG) passes through the Strait of Hormuz. If Iran were to completely block this route, oil prices could exceed $100 per barrel, sharply increasing the import bill of oil-dependent countries like Pakistan. In such a scenario, the current account deficit could re-emerge, and the rupee could come under renewed pressure.
Omar Butt noted that Pakistan’s annual oil imports already amount to billions of dollars, and any price increase would fuel inflation, raise transport fares, increase industrial production costs, and undermine export competitiveness.
He added that nearly five million Pakistanis work in Gulf countries, and remittances remain a key pillar of the economy. If regional tensions escalate or employment opportunities are disrupted, the government’s $41 billion remittance target could be jeopardised.
Financial experts believe that fears of war could push global stock markets down by one to two percent, while investors may shift toward safe-haven assets such as the US dollar and gold. Emerging market currencies could face volatility, and foreign portfolio outflows may intensify. If the Strait of Hormuz remains closed for an extended period, the global economy could slip into recession, making it even more difficult for Pakistan to meet the fiscal targets under its ongoing $7 billion IMF program.
Butt urged responsible nations to prevent the world from sliding toward a third world war. He stressed that policymakers in Pakistan must prepare contingency plans, including building strategic reserves, diversifying energy supplies, and closely monitoring external sector indicators. Proactive steps, he said, could help cushion shocks and maintain investor confidence during heightened geopolitical uncertainty.
