New Delhi, May 1: The ongoing conflict in West Asia has begun to significantly impact global oil prices, leading Pakistan to face its most severe fuel price crisis in half a century. According to reports, this situation could deepen economic troubles and destabilize Prime Minister Shehbaz Sharif’s government.
As per Al Jazeera, the rise in global oil prices has particularly affected Pakistan, which heavily relies on imported energy and remittances from Gulf countries. The country’s balance of payments is already in a fragile state.
The report highlights that the ongoing conflict may severely disrupt remittances from workers abroad, especially those employed in Gulf nations. Earlier this week, Prime Minister Shehbaz Sharif stated that Pakistan’s oil import bill has surged from $300 million to $800 million, effectively erasing economic progress made over the past two years.
Experts warn that rising fuel prices will have a cascading effect on the entire economy, impacting agriculture, transportation, and the prices of essential goods, thereby exacerbating the already severe inflation crisis.
Economist Kamran Butt told The Dawn that the increase in oil prices triggers a chain reaction throughout the economy, reducing purchasing power, increasing poverty and unemployment, slowing economic activities, and heightening public discontent against the government.
In response to escalating economic risks, the State Bank of Pakistan has raised its policy interest rate by 1% to 11.5%. The bank noted that global energy prices, freight charges, and insurance premiums remain significantly above pre-conflict levels, contributing to ongoing supply chain disruptions and uncertainty.
The government faces a tough choice—either pass the increased costs onto consumers or provide subsidies for fuel. However, increasing subsidies would widen the budget deficit, which is constrained by conditions set by the International Monetary Fund.
Economist Kaiser Bengali remarked that Pakistan is in a situation where even a small financial aid of $1 billion could make the difference between “survival and economic collapse.”
Deependra Singh Chundawat is a Senior Sub-Editor at Udaipur Kiran, specializing in a wide range of technology topics including mobile phones, applications, gaming, PCs, and wearables. Along with covering the latest tech news, he also creates engaging web stories. Passionate about emerging technologies, he stays up to date with the newest trends and enjoys reading and writing about the latest mobile launches and digital innovations.
