Pakistan's heavy reliance on imported energy was laid bare by the U.S.-Iran conflict, which disrupted regional supplies, drove up costs and exposed vulnerabilities in the country's energy security. However, a proposed peace agreement now offers hope for economic relief.
Pakistan's economy remains heavily dependent on imported energy despite growing investment in renewable power. Domestic gas production supplies around 2,700 million cubic feet per day, while imported liquefied natural gas (LNG) contributes roughly 600 million cubic feet daily and generates nearly one-quarter of the country's electricity.
Qatar and the United Arab Emirates account for around 99 per cent of Pakistan's LNG imports, while Iran has traditionally supplied more than 60 per cent of the country's liquefied petroleum gas (LPG) needs. This dependence leaves Pakistan highly vulnerable to geopolitical tensions and disruptions in regional energy markets.
The U.S.-Iran conflict rapidly transformed Pakistan's energy outlook. Before the war, Islamabad was grappling with excess LNG supplies as demand fell due to increased solar adoption and weaker industrial activity.
The situation changed when attacks on Iranian and Qatari energy infrastructure disrupted regional supplies. The Strait of Hormuz, through which nearly one-fifth of global oil and LNG trade passes, became a source of uncertainty, affecting global markets and energy flows. LNG shipments to Pakistan fell sharply while import costs increased, exposing the risks of relying on a limited number of suppliers.
Higher oil and gas prices quickly translated into broader economic pressures. Economists estimate that every US$10 increase in crude oil prices can add between US$1.5 billion and US$2 billion to Pakistan's current account deficit each year.
The conflict pushed inflation back into double digits and threatened gains achieved under Pakistan's economic stabilisation programme. Higher fuel prices increased transport and production costs while placing additional pressure on household budgets. Pakistan's stock market also experienced volatility amid concerns over regional instability and energy security.
The crisis also highlighted the growing role of renewable energy. According to a study by the Policy Research Institute for Equitable Development (PRIED), Pakistan's 34 gigawatts of installed solar capacity helped cushion the economy from a more severe shock.
Experts argue that expanding battery storage, upgrading the electricity grid and accelerating investment in domestic renewable resources are essential to reducing future dependence on imported fuels.
The proposed U.S.-Iran peace agreement has improved sentiment across energy and financial markets. Finance Minister Muhammad Aurangzeb said the deal could create upside potential for Pakistan's economic outlook, although it remains too early to revise official forecasts.
Pakistan's 2026-27 fiscal year budget targets economic growth of 4 per cent and inflation of 8.2 per cent. While damaged regional energy infrastructure will take time to recover, easing tensions could reduce pressure on supply chains, lower energy costs and improve investor confidence.
The conflict underscored the risks associated with Pakistan's reliance on imported energy. While the peace agreement offers welcome economic breathing space, long-term resilience will depend on diversifying energy supplies, strengthening renewable generation and improving energy planning.
For Pakistan, achieving sustainable growth will require turning energy security into a national economic priority.
Four Turkish military personnel have been killed after an S-70 helicopter crashed in the eastern province of Malatya on Thursday, Türkiye'...
President Vladimir Putin agreed on Thursday to let European representatives jo...
Azerbaijan and the UK have pledged to strengthen defence, trade and education cooperation after signing a joint declaration elevating relations to ...
European leaders gathered in Dublin on Thursday, 12 November, for the ninth European Political Community (EPC) summit, with security, defence and energy high on the agenda. Azerbaijani President Ilham Aliyev held talks focused on peace, trade and regional cooperation.
UN Secretary-General António Guterres delivered a stark warning at this year's COP31 summit, saying the climate crisis iss advancing faster than governments' efforts to contain it.
Iran will not let a single particle of its enriched nuclear material leave the country, and any new U.S. attack would be met with strikes on distant American bases, Iranian security chief Mohsen Rezaei has said.
Nvidia chief executive Jensen Huang is stepping down amid reports linking him to a woman suspected by U.S. authorities of spying for China, throwing the future of the $4 trillion chipmaker into uncertainty.
Here's your AnewZ Daily Brief for 11 November. Today, we cover Russia-Ukraine peace talks, political tensions in Washington, strikes in Spain, espionage allegations involving Nvidia's CEO, and climate negotiations at COP31 in Türkiye.
President Vladimir Putin agreed on Thursday to let European representatives join the next round of Ukraine peace talks while the United States continues to work towards what could become the largest prisoner exchange of the Russia-Ukraine war.
Azerbaijan and the UK have pledged to strengthen defence, trade and education cooperation after signing a joint declaration elevating relations to a strategic level in Dublin, Ireland on Thursday (12 November).
More than 333,000 people have been forced from their homes in Yemen since the beginning of August as fighting has escalated, including more than 24,000 in the past week alone, the United Nations said on Thursday.
A court in Russia’s Baltic exclave of Kaliningrad has sentenced human rights lawyer Maria Bontsler to 12 years in prison on treason charges, after prosecutors accused her of passing sensitive information to Ukraine.
U.S. President Donald Trump has threatened to double tariffs on Mexico unless it stops more than a thousand migrants who are walking north towards the United States, warning that they will be denied entry.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment