KARACHI: Saquib Fayyaz Magoon, a senior figure in the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has sounded an alarm over escalating tensions in the Gulf that could threaten Pakistan's economy. He has urged the government to declare an energy emergency and find alternate supply routes amidst the potential closure of the Strait of Hormuz.
According to Federation of Pakistan Chambers of Commerce and Industry, Magoon highlighted the instability in global energy supply chains due to the regional situation, emphasizing the direct impact on energy-importing countries like Pakistan. The Strait of Hormuz is crucial, handling nearly 20 percent of global oil shipments, and any disruption could cause significant market upheaval and economic crises in fuel-reliant nations.
Pakistan relies heavily on energy imports from countries in the Gulf region. Magoon warned that even minor disruptions could lead to increased fuel and electricity prices, worsening inflation and the cost-of-living crisis. Ports in Karachi and Port Qasim are closely linked to Gulf shipping routes, making Pakistan particularly vulnerable to maritime disruptions.
Magoon pointed out that recent hostilities involving Iran have already affected tanker movements, with LNG freight rates increasing by over 40 percent. This reflects the heightened risks perceived by global shippers and insurers, causing rates in the Pacific basin to rise significantly.
While acknowledging the potential strategic importance of Gwadar Port in the long term, Magoon warned of an immediate economic shock if tensions in the Gulf persist. He called on the government to secure alternative energy supply routes, build strategic petroleum reserves, and engage in diplomatic efforts to ease regional tensions.
He emphasized that timely policy action is necessary to protect industries and consumers from the effects of rising import costs, volatile exchange rates, and potential energy shortages. Coordinated efforts between policymakers, regulators, and the business community are essential to navigate the crisis, Magoon asserted.
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