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.
Ford raised its full-year earnings forecast after reporting stronger-than-expected second-quarter adjusted profit, as resilient demand for its vehicle...
Saudi Arabia said its overnight strikes on Iran-backed group targets in Iraq were carried out in self-defence and warned it would take further militar...
Russia’s largest retailer Wildberries has begun searching for warehouse space in Kazakhstan, Moscow’s Kommersant newspaper has reported, citing so...
U.S. President Donald Trump said on Monday that there is a good chance” of reaching a deal with Iran, but warned that Washington would resume military operation if negotiations fail.
The Russia-Ukraine war is increasingly reshaping the Caspian region. From threats to energy infrastructure to renewed diplomatic efforts, countries across the region are adapting to the wider consequences of a conflict that continues to disrupt trade, transport and security.
Yemen warned the Houthis were seeking to replicate Iran's Strait of Hormuz strategy in the Red Sea, as U.S. President Donald Trump said there was a "good chance" of a deal with Tehran but warned strikes could resume if talks failed.
Moscow should stop linking Russia-Armenia relations to Azerbaijan, Baku's Foreign Ministry spokesperson Aykhan Hajizada has said, after Russia again raised the Collective Security Treaty Organisation's role during the former Garabagh conflict.
The 27 July edition of Daybreak covers a pause in fighting between the U.S. and Iran, the latest developments in Russia's war against Ukraine, and mass evacuations as wildfires continue to spread across France and Spain.
Russia’s largest retailer Wildberries has begun searching for warehouse space in Kazakhstan, Moscow’s Kommersant newspaper has reported, citing sources in the real estate market. It comes after Ukrainian drone strikes damaged around 10 per cent of the online marketplace's logistics hubs in Russia.
Yerevan has seen a surge in Russians seeking apartments ahead of Moscow's parliamentary elections in September and amid rumours of mass mobilisation, Russian-language publication Verstka has reported, citing anecdotal evidence from local estate agents.
UNESCO has added 25 new properties to its World Heritage List during the 48th session of the World Heritage Committee in Busan, South Korea. The newly inscribed sites include cultural, natural and mixed properties, bringing the total number of World Heritage sites worldwide to 1,273.
Malaysian authorities have released more than 100 Rohingya Muslim asylum seekers who were detained earlier this week, with the group being sent to various locations across the country.
China expects Slovakia to play a constructive role in promoting the steady development of relations between China and the European Union, President Xi Jinping said during talks with Slovak President Peter Pellegrini in Beijing on Tuesday.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment