The Pakistan Business Network has warned that an attack on Iran could immediately trigger a surge of up to $20 per barrel in global crude oil prices, a move that would place developing economies under severe strain and could directly undermine Pakistan’s economic recovery.
In a statement today, Omar Butt, President of the Pakistan Business Network, outlined the profound economic consequences of potential military action, highlighting the vulnerability of global energy supply chains.
He explained that the Strait of Hormuz is a critical chokepoint for global energy, with approximately 25 to 30 percent of the world’s crude oil supply and around 20 percent of its liquefied natural gas (LNG) passing through it.
If Iran were to completely block the strait, oil prices could surpass $100 per barrel. Such a development would drastically inflate the import bills of oil-dependent nations, risk a resurgence of the current account deficit, and place further pressure on the rupee.
Mr. Butt pointed out that Pakistan’s annual oil import expenditure already runs into billions of dollars. A significant price hike would have far-reaching effects on the domestic economy, impacting inflation, transport fares, industrial production costs, and the competitiveness of the country’s exports.
Another major concern is the potential disruption to overseas employment. “Nearly five million Pakistanis work in the Gulf countries, and their remittances are a vital pillar of the economy,” he added, warning that escalating tensions could jeopardize the government’s $41 billion remittance target.
According to financial experts, the outbreak of war could cause global stock markets to decline by one to two percent as investors would shift towards safe-haven assets like the U.S. dollar and gold.
A prolonged closure of the Strait of Hormuz could push the global economy into recession. This would make it significantly more difficult for Pakistan to achieve the fiscal targets set under its ongoing seven-billion-dollar program with the IMF.
The business leader stressed that Pakistani policymakers must undertake immediate contingency planning. This should include establishing strategic reserves, diversifying energy sources, and closely monitoring external sector indicators to build resilience.
“Proactive measures will help mitigate the impact of the war and maintain investor confidence during uncertainty,” he advised.
He concluded by emphasizing diplomacy, stating that “responsible nations must save the world from a third world war.”