Pakistan’s Prime Minister Shehbaz Sharif has warned that the US–Iran war has dealt a serious blow to Pakistan’s economic gains, with the country’s weekly oil‑import bill more than doubling from $300 million to about $800 million since the conflict began in February 2026. Speaking during a cabinet meeting in Islamabad, Sharif described the surge in fuel prices and energy‑cost pressures as a major setback to the modest recovery Pakistan had built over the previous two years.
How the war is hitting Pakistan’s economy
The spike stems directly from soaring global crude and oil prices and disruptions around the Strait of Hormuz, through which a large share of Pakistan’s energy imports must pass. The war‑driven risk premium has pushed benchmarks such as Brent crude above $110 a barrel, sharply raising what an oil‑import‑dependent economy like Pakistan must pay for fuel, electricity generation, and transportation. Sharif told the cabinet that a dedicated task force is monitoring the situation daily and coordinating with international partners to manage external‑sector stress.
Austerity and domestic measures
To cope with the imported‑oil shock, Pakistan has already introduced emergency austerity and fuel‑conservation measures, including a two‑week closure of schools, a four‑day workweek for many government offices, and cuts in fuel allowances for official vehicles. The government has also urged public‑sector bodies and parastatals to reduce energy consumption and travel, in a bid to save foreign exchange and shield the fiscal balance from the worst of the crisis.
Diplomacy amid domestic strain
At the same time, Pakistan continues to position itself as a mediator between the warring sides, with Sharif insisting that Islamabad will keep working to ease tensions between the US and Iran and support broader peace in West Asia. Yet the domestic‑economic fallout underscores how Pakistan—a country perennially vulnerable to external shocks—is caught between the benefits of regional‑peace diplomacy and the brutal cost of imported‑energy inflation.
