A prominent business leader todayurged the Pakistani government to proceed with a $3.5 billion payment to the United Arab Emirates, suggesting the demand could be a form of political pressure on the nation as it grapples with a deepening global economic crisis.
Zubair Tufail, President of the United Business Group (UBG) and a former head of the FPCCI, stated that the nation should support the administration”s decision to pay the amount. He speculated that while Dubai’s rulers may urgently require the funds, it is also possible the demand is intended to exert leverage over Pakistan, remarking that the payment should be settled to neutralise any such pressure.
Tufail contextualised the situation within a global economy under severe stress from geopolitical tensions involving the United States, Israel, and Iran. This has caused a dramatic escalation in the price of crude oil, a fundamental commodity, which has surged from around $65 before February 28 to its current price of $110-an increase of over 70%.
The energy crisis has been compounded by disruptions to natural gas supplies. He noted that Qatar, the world”s largest gas supplier, has halted its LNG shipments through the now-closed Strait of Hormuz. This has forced the Gulf state to shut down most of its refineries and LNG plants and inform Pakistan of its inability to continue gas provisions, contributing to a 70% spike in LNG prices in Europe.
Domestically, while Pakistan’s industry has not come to a complete standstill, the Middle East crisis has caused production costs to rise significantly and created substantial hurdles for exports.
He pointed to a recent social media post by former US President Donald Trump, who reportedly warned that Iran could be “devastated,” as a sign that tensions could intensify within the next 48 hours. Tufail cautioned such an escalation could push crude oil prices to between $150 and $175 per barrel.
Pakistan also faces immense domestic financial strain, with a $4.8 billion external debt repayment due this month. This obligation, which includes a $1.3 billion Eurobond maturing after 10 years, is set to put significant pressure on the country”s economy and foreign exchange reserves. Tufail commended the current administration, stating it was handling the challenging circumstances effectively.
The sharp increase in petroleum costs is expected to fuel inflation and create considerable hardship for lower- and middle-income groups. Declining exports and reduced remittances are adding to the nation’s economic challenges, alongside persistently high electricity costs for industries in Karachi.
Tufail warned that rising fuel prices are crippling the transport sector and severely affecting the national supply chain. He concluded that if the current situation persists, there is a serious risk of shortages of food items and other essential goods across the country in the coming days.