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.
Uzbekistan could lose up to $1.5 billion if escalating Middle East tensions disrupt vital trade and logistics routes through Iran, putting pressure...
Pakistan is turning to more U.S. crude as disruption around the Strait of Hormuz exposes the risks of its heavy reliance on Gulf energy supplies....
Britain will continue to support Ukraine “100 per cent” against Russia’s invasion, Prime Minister Andy Burnham said on Tuesday, a...
At least 11 people were killed in Israeli strikes on southern Lebanon on Saturday, among the deadliest since a June ceasefire. Meanwhile, Qatar denied holding Iranian pilots. It said it had found the remains of one pilot after an airspace violation and had contacted Iran to coordinate a handover.
U.S. President Donald Trump says Washington is not seeking an extension of its memorandum of understanding with Iran, claiming the U.S. already controls the Strait of Hormuz through its naval blockade.
Iran has said the Strait of Hormuz will remain closed until the U.S. fulfils the terms of an interim deal, including lifting the maritime blockade and sanctions and releasing Iran’s frozen assets.
South Korea's presidential Blue House said on Monday it was reviewing U.S. President Donald Trump's comments on scaling back joint military drills. It added that it hoped a favourable relationship between Washington and Pyongyang could lead to meaningful talks.
Ukraine has targeted at least 20 Wildberries warehouses across Russia since 18 July, disrupting a major logistics network. Kyiv says the strikes aim to disrupt alleged military-linked supplies, while the attacks have caused billions of dollars in losses and wider economic pressure.
Britain will continue to support Ukraine “100 per cent” against Russia’s invasion, Prime Minister Andy Burnham said on Tuesday, after Moscow warned London of consequences over reports that British-made drones had been used in strikes on Russian territory.
Russia has summoned Japan’s ambassador to Moscow and delivered a strong protest over what it called “anti-Russian” remarks by Japanese Prime Minister Sanae Takaichi and Foreign Minister Toshimitsu Motegi concerning four disputed islands.
Pakistan is turning to more U.S. crude as disruption around the Strait of Hormuz exposes the risks of its heavy reliance on Gulf energy supplies.
U.S. Forces Korea (USFK) Commander Xavier Brunson visited South Korea's Defence Ministry on Tuesday to discuss plans to scale back the joint Ulchi Freedom Shield military exercise, according to media reports.
European countries are stepping up investment in drones and counter-drone technology as unmanned systems reshape modern warfare, driving demand for new production and capabilities across the continent.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment