The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) today issued a stark warning that Pakistan’s fragile economic recovery is under severe threat from the escalating Middle East conflict, calling for immediate government intervention to prevent the nation from becoming “collateral damage” amidst surging geopolitical volatility.
Atif Ikram Sheikh, President of the FPCCI, cautioned that disruptions in the Red Sea and the Strait of Hormuz pose a significant danger to the country”s energy security and export competitiveness.
The FPCCI chief noted that with nearly 30% of global petroleum consumption passing through the Strait of Hormuz, any prolonged blockage would trigger massive supply chain shocks. ‘We must proactively shield our economy; secure our energy lifelines and protect our exporters from skyrocketing logistics costs,’ he added.
Mr. Sheikh highlighted the nation’s pronounced vulnerability, pointing to Pakistan”s heavy reliance on Gulf energy. The country imports over $5.7 billion in crude petroleum annually, primarily from Saudi Arabia (approximately $3.2 billion) and the United Arab Emirates (approximately $2.3 billion). This figure rises to $10.71 billion when refined petroleum products are included.
The crisis in the Red Sea is forcing commercial shipping to reroute, which could add 15 to 20 days to transit times for Pakistani exports destined for its largest markets, including the EU, UK, and the U.S.
He maintained that freight costs on key shipping routes could surge by up to 300%, while marine insurance premiums have also spiked due to war-risk classifications. This threatens to severely inflate the cost of imported raw materials and erode the price competitiveness of Pakistani textiles and other manufacturing exports.
To safeguard the national economy, the FPCCI president proposed that the federal government should implement protective measures, build up petroleum reserves, and finalise contingency agreements for backup oil supplies, including deferred payment facilities with allies like Saudi Arabia.
Echoing the call for action, Saquib Fayyaz Magoon, SVP of FPCCI, stated that freight and insurance relief must be introduced through the Ministry of Commerce and the State Bank of Pakistan (SBP). He advocated for a targeted relief package to subsidise the exorbitant increases, which could otherwise cripple the country”s export earnings.
Mr. Magoon also emphasised the need to maximise indigenous refining capabilities by supporting domestic refineries to operate at enhanced capacities. “We need a localized, resilient strategy that protects our energy supplies and keeps our export engines running. The FPCCI stands ready to work with the government to navigate through this geopolitical storm,” he concluded.