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  "path": "/pakistan-economy-jolted-as-iran-israel-war-drives-oil-surge-market-crash",
  "publishedAt": "2026-03-09T17:45:28.000Z",
  "site": "https://nukta.com",
  "textContent": "\n\n\nPakistan’s fragile economic recovery has come under sudden pressure as the expanding war between the United States, Israel and Iran sends shockwaves through global energy markets and financial systems, according to Kamran Khan.\n\nSpeaking on his program “On My Radar,” Kamran Khan said the conflict has created a “major economic earthquake” that has shaken Pakistan’s economy at a moment when it was just beginning to emerge from a severe crisis.\n\nKamran Khan said the situation has become increasingly visible by the tenth day of the conflict, with Pakistan’s financial markets tumbling, the currency facing pressure and inflation risks returning.\n\nThe regional war has not only reshaped political dynamics in the Middle East but has also disrupted global oil markets, shipping routes and financial flows, he said.\n\nDuring the past 10 days, the Pakistan Stock Exchange has experienced its second historic crash, while fuel prices have surged sharply and economic uncertainty has grown.\n\nDespite the turbulence, Pakistan’s central bank decided not to increase interest rates, keeping the policy rate unchanged at 10.5 percent.\n\nKamran Khan said the most immediate economic threat for Pakistan comes from the surge in global oil prices.\n\nSince the conflict began, Brent crude prices have climbed nearly 60 percent to around $117 per barrel and briefly touched $120, he said.\n\nThe increase has been driven largely by the closure of the Strait of Hormuz, one of the world’s most critical oil transit routes.\n\nNearly 20 percent of global oil supply passes through the strait, making any disruption there a major risk to global energy markets.\n\nAccording to energy experts cited by Kamran Khan, every $10 increase in oil prices adds roughly $1.5 billion to $2 billion annually to Pakistan’s import bill.\n\nWith prices now roughly $25 to $30 higher than before the conflict, Pakistan’s annual oil import bill could increase by $4 billion to $6 billion.\n\nSuch a rise would place additional strain on the country’s current account balance and foreign exchange reserves.\n\nThe shock comes as Pakistan is already struggling with a large trade deficit.\n\nIn February, Pakistan recorded exports of about $2.3 billion while imports stood at roughly $5.3 billion, creating a monthly trade deficit of nearly $3 billion.\n\nIf global oil prices remain between $110 and $120 per barrel, Kamran Khan said Pakistan’s monthly import bill could rise by an additional $400 million to $500 million.\n\nThat increase would add pressure on the country’s foreign exchange reserves and make it harder to stabilize the Pakistani rupee.\n\nThe impact of the global energy shock is also being felt directly by consumers.\n\nLast Friday, the government raised petrol and diesel prices by PKR 55 per liter in a single adjustment.\n\nFollowing the increase, petrol prices reached roughly PKR 321 per liter, while diesel climbed to about PKR 336 per liter.\n\nKamran Khan said the sharp fuel increase has already triggered new fears of inflation across the economy.\n\nAfter suffering one of the worst inflation crises in its history during 2023 and 2024, Pakistan had begun to see some improvement in price stability.\n\nHowever, if global oil prices remain above $100 per barrel, inflation could rise by two to three percentage points and potentially return to a range of 20 to 25 percent, he said.\n\nDiesel plays a critical role in Pakistan’s logistics system, powering trucks, agricultural machinery and construction equipment.\n\nAs diesel prices rise, transportation costs increase and food, manufacturing and distribution prices typically climb within weeks.\n\nKamran Khan described the effect as an economic “multiplier” that spreads inflation across multiple sectors.\n\nAnother major challenge emerging from the conflict is the disruption of liquefied natural gas supplies.\n\nReports indicate that LNG cargo shipments from Qatar have dropped by nearly 75 percent since the conflict began, placing significant strain on Pakistan’s gas distribution network.\n\nAs a result, Sui Southern Gas Company has extended gas outages for domestic consumers during Ramadan.\n\nGas utilities including Sui Southern Gas Company and Sui Northern Gas Pipelines have also reduced supply to commercial and industrial users.\n\nIf volatility in global energy markets continues, Kamran Khan warned Pakistan could face energy shortages in the coming weeks.\n\nFinancial markets have also reacted sharply.\n\nThe Pakistan Stock Exchange recorded one of the largest single-day crashes in its history, with the benchmark KSE-100 index plunging 16,089 points, a drop of nearly 9.5 percent.\n\nThe decline wiped out roughly PKR 1.7 trillion in market capitalization and forced a temporary halt in trading.\n\nThe market later recovered some losses but still closed down 11,015 points at 146,480.\n\nJust days earlier, on March 2, the index had also dropped about 9 percent, triggering a trading halt for an hour.\n\nThat decline marked the first time in the exchange’s history that the index had fallen by more than 16,000 points in a single day.\n\nKamran Khan said the repeated market crashes highlight structural vulnerabilities in Pakistan’s economy, particularly its reliance on energy imports and foreign investment flows.\n\nAnother concern relates to remittances from Pakistani workers abroad.\n\nMore than 60 percent of Pakistan’s remittances come from Gulf economies including Saudi Arabia and the United Arab Emirates.\n\nIf regional uncertainty slows construction projects or investment in Gulf states, employment opportunities for Pakistani workers could decline.\n\nEven a five to 10 percent drop in remittances could reduce Pakistan’s annual external income by several billion dollars, Kamran Khan said.\n\nAlthough Pakistan’s currency has remained relatively stable in recent months due to an International Monetary Fund program and strict financial discipline, the oil shock could change that dynamic.\n\nA higher oil import bill would increase demand for dollars, placing renewed pressure on the rupee.\n\nThat scenario could also raise government borrowing costs and complicate economic management.\n\nEnergy experts have warned that if the Strait of Hormuz remains closed for an extended period, global oil prices could surge to $150 per barrel.\n\nKamran Khan said such a development could trigger severe economic consequences for Pakistan.\n\nIn simple terms, he said, Pakistan’s economy is closely linked to the Middle East through energy imports, remittances, maritime trade and labor markets.\n\nBecause of those connections, any major geopolitical shock in the region has immediate economic repercussions for Pakistan.\n\nKamran Khan said that if the current conflict remains limited, Pakistan may be able to absorb the pressure.\n\nHowever, if the war expands or continues for an extended period, he warned the country could face one of the most severe economic crises in its recent history.",
  "title": "Pakistan economy jolted as Iran-Israel war drives oil surge, market crash"
}