The escalating conflict between the United States and Iran has plunged global energy markets into a state of severe uncertainty, disrupting nearly 20 percent of the world’s oil and liquefied gas shipments following the closure of the critical Strait of Hormuz, according to Zubair Tufail, President of the United Business Group (UBG).
In a statement today, the former president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) noted that the prolonged hostilities are now negatively affecting the economies of Asian and Gulf nations, with Pakistan’s exports also being impacted.
The closure of the strategic strait has severely obstructed global oil and gas supplies, with Middle Eastern oil production facing a reduction of up to 10 million barrels per day. Tufail highlighted reports from energy companies indicating that maritime shipping has become difficult without Iran”s consent, and industry assessments suggest a return to normality could take several weeks or even months.
Citing a British news agency, Tufail stated that the recovery of global energy markets is now largely dependent on Iran’s decisions. The uncertainty is underscored by Saudi Arabia’s state-owned oil company, Saudi Aramco, which has informed buyers it cannot confirm from which port its April oil shipments will be exported.
This heavy reliance on foreign fuel makes Pakistan highly vulnerable to fluctuations in global prices. Tufail explained that every $10 increase in oil prices widens Pakistan’s current account deficit by approximately $1.5 to $2 billion, while inflation typically rises by 0.5 to 0.6 percentage points.
To counter this vulnerability, Tufail stressed the urgent need for Pakistan to fully utilise its domestic Thar coal resources. He argued that efforts must be accelerated to expand electricity generation from local coal and increase the supply of local gas to reduce dependence on imported fuel, which currently meets over 40 percent of the nation”s basic energy requirements.
While appreciating the austerity and fuel-saving measures announced by Prime Minister Shehbaz Sharif, Tufail questioned the rationale behind increasing the salaries of National Assembly members and ministers at a time when deductions are being made from the salaries of other government employees.
He suggested that for the government’s austerity policies to deliver meaningful results, the supply of petrol for vehicles used by ministers and bureaucrats at their residences should be stopped immediately.