Karachi: The ongoing conflict between the United States and Iran is causing significant disruptions to global energy markets and supply chains, particularly affecting Asian and Gulf economies, according to Zubair Tufail, President of the United Business Group and former president of the Federation of Pakistan Chambers of Commerce and Industry. He highlighted that Pakistan's exports have also been adversely impacted.
According to United Business Group, the closure of the Strait of Hormuz has led to a severe disruption in global oil and gas supplies, with Middle Eastern oil production seeing a reduction of up to 10 million barrels per day. Energy companies have reported challenges in maritime shipping without Iran's consent, and industry assessments suggest that it may take weeks or months for conditions to stabilize.
Tufail cited a British news agency, noting that the resolution of global energy market disruptions hinges on Iran's decisions following the strait's closure amid Middle Eastern conflict. Saudi Aramco has informed buyers of uncertainties in oil shipment ports for April, as the Gulf conflict and ship attacks have disrupted nearly 20 percent of global oil and liquefied gas shipments. This could further strain economies in major Asian and Gulf countries.
Referring to a recent report, Tufail emphasized the urgent need for Pakistan to harness its Thar coal resources to mitigate reliance on imported fuels amid global market uncertainties. He pointed out that over 40 percent of Pakistan's energy needs are met through imports, making the country vulnerable to global price fluctuations affecting inflation and current account deficits.
Tufail explained that a $10 increase in oil prices could raise Pakistan's current account deficit by $1.5 to $2 billion and increase inflation by 0.5 to 0.6 percentage points. He advocated for increased electricity generation from Thar coal and expansion of local gas supplies to mitigate these economic risks.
He acknowledged the austerity and fuel-saving measures announced by Prime Minister Shehbaz Sharif but questioned the decision to increase salaries for National Assembly members and ministers amidst salary deductions for government employees.
Tufail suggested that stopping petrol supply for vehicles used by ministers and bureaucrats at their residences is essential for effective austerity and fuel conservation measures.
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