Pakistan’s Prime Minister Shehbaz Sharif announced on Wednesday that the country’s oil import bill has jumped 167% to $800 million per week amid the war in Iran from around $300 million weekly before the conflict began. Brent crude for June delivery was trading at $114.75 per barrel at 7.00 am ET on Wednesday, a big jump from the low 70s before the war, while the corresponding WTI crude contract was changing hands at $103.33/bbl from mid 60s in late February.
According to Prime Minister Sharif, the spike in fuel prices has “dented the collective efforts” of the past two years to stabilize Pakistan’s economy.
Pakistan’s economy remains highly vulnerable to global oil price volatility, with recent geopolitical tensions in the Middle East reinforcing this cycle. Pakistan’s total oil consumption hovers around 440,000 bpd, five times domestic production of 80,000-90,000 bpd, forcing the country to rely on imports to meet 80% of its needs. Elevated global oil prices have caused petrol prices in Pakistan to hit unprecedented highs, driving up transportation, energy, and overall consumer costs.
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Additionally, when oil prices rise, the country must spend more of its limited foreign exchange reserves, often leading to currency devaluation, which makes everything else more expensive. Economists warn that persistent high energy prices could slow GDP growth to 1.8% for FY27, down from earlier estimates of 3.2%.
The Pakistani government is aggressively implementing nationwide energy conservation measures to mitigate a severe fuel crisis with some degree of success. Public sector offices are moving to a four-day work week, with 50% of staff working from home, except for essential services. Markets, shopping malls and commercial centers across the country (except for Sindh, where consultations are ongoing) are required to close by 8:00 pm local time while restaurants, cafes and bakeries are required to shut by 10:00 pm. Approximately 60% of official vehicles have been grounded, and fuel allowances for government departments slashed by 50%.
The PM has reported that these measures are bearing fruit, with fuel consumption beginning to fall.
By Alex Kimani for Oilprice.com
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