Pakistan Economy Reels Under US-Iran Conflict, Fuel Crisis Deepens

While diplomatic efforts are underway, with Islamabad actively engaging to de-escalate the situation, there is still no final resolution in sight, as per The News International report.

The continued uncertainty, coupled with disruptions in key energy routes such as the Strait of Hormuz, has kept fuel supplies tight and prices elevated, hitting energy-dependent Asian economies particularly hard.

Pakistan, which relies heavily on imported fuel, has already faced significant price hikes in recent weeks.

Although prices have eased slightly, the situation remains volatile, raising concerns about further increases if tensions persist.

The impact is now being felt across the energy supply chain, with widespread power outages and gas shortages reported in several parts of the country, as per the report.

The rising costs are also beginning to reflect in consumer bills, with the power regulator set to collect a Rs 1.42 per unit increase for February's fuel adjustment in upcoming electricity bills.

Analysts warned that the burden could grow further if the crisis drags into the peak summer months, when energy demand typically surges, the report stated.

Government measures aimed at reducing energy consumption are also drawing criticism.

The Chainstore Association of Pakistan has flagged significant economic losses due to early retail closing hours, estimating a hit of nearly Rs 200 billion in economic activity within just two weeks.

The body argues that organised retail businesses are bearing the brunt of these restrictions, while informal markets continue to operate with fewer constraints, creating distortions rather than genuine energy savings, as per the report.

The broader economic outlook remains concerning. According to estimates by the United Nations Development Programme, more than 30 million people could be pushed back into poverty due to disruptions caused by the conflict, including shortages of fuel and fertilisers at a critical time for agriculture.

Experts caution that even if the conflict were to end immediately, its economic consequences would likely persist, the report stated.

- IANS