Soaring fuel prices in Pakistan threaten economic and political crises

Pakistan is facing a severe economic and political crisis due to a dramatic surge in its fuel import bill, which has tripled from $300 million to $800 million. This significant increase, attributed to rising global energy prices exacerbated by the Middle East conflict, threatens to destabilize the economy and undermine Prime Minister Shehbaz Sharif's government. The escalating fuel costs are expected to trigger a chain reaction, impacting agriculture, transportation, food prices, and the cost of basic goods, worsening an existing cost-of-living crisis for families. In response, the State Bank of Pakistan has raised its key policy rate to 11.5 percent, acknowledging the intensified macroeconomic risks from prolonged conflict and supply chain disruptions.

Global oil prices surged to a four-year high, exceeding $122 a barrel on Thursday. This price increase is attributed to concerns that a potential escalation of conflict between the United States and Iran could disrupt Middle Eastern oil supplies. The market reacted to a report that US President Donald Trump was scheduled to receive a briefing on plans for military strikes against Iran, aimed at prompting negotiations on its nuclear program. Brent crude futures saw a significant rise, reaching their highest point since March 9, 2022, as traders anticipated potential supply disruptions. This development raises worries about the impact on global economic growth.

Analysis by the climate organization 350.

The International Energy Agency (IEA) released a report on April 14, 2026, sharply cutting forecasts for global oil supply and demand growth. The IEA attributes the expected decline to disruptions from the United States-Israel war on Iran, which is impacting oil flows and the global economy. Global oil demand is projected to fall by 80,000 barrels per day in 2026, a significant drop from the previously projected increase of 640,000 bpd. The IEA also noted that attacks on energy infrastructure and Iran's closure of the Strait of Hormuz have caused a major oil supply disruption. The IEA, along with the IMF and World Bank, urged countries to avoid hoarding energy supplies and imposing export controls.

BP anticipates "exceptional" oil trading profits for the first quarter due to market volatility stemming from the US-Israeli war on Iran and the disruption of oil supply through the Strait of Hormuz. This follows a similar announcement from Shell, with analysts upgrading BP's profit forecasts. Brent crude oil prices have risen sharply, averaging $78 a barrel in the first quarter, impacting refining margins which also increased. The International Energy Agency (IEA) has reduced its global oil demand forecast for the year, citing the Middle East conflict's impact on both supply and demand, with global oil supply plummeting in March. BP's overall oil and gas production is expected to remain stable, and the company is scheduled to report its first-quarter results on April 28.