Pakistan on Brink of Economic Collapse as Regional War Threatens Vital Sectors

DID Press: Pakistani economic journalist Khurram Hussain warns that Pakistan’s economy is highly vulnerable amid the ongoing conflict between Iran, the United States, and Israel, which has escalated regional instability.

Fuel Prices Soar – According to Hussain, oil prices in Pakistan have reached their highest levels since 2008. Key benchmarks in Dubai and Oman have surpassed $150 per barrel. Following a recent 55-rupee increase, the government is incurring weekly losses of 23 billion rupees to stabilize prices. Islamabad now faces a difficult choice: either raise fuel prices by over 100 rupees per liter or risk a budget shortfall that could derail its International Monetary Fund (IMF) program.

Diesel Shortages Threaten Agriculture – Refineries have been instructed to prioritize diesel and jet fuel production, especially for military aircraft, to prevent shortages during the wheat harvest. Gas cuts have also halted fertilizer production, and if the conflict continues through June, Pakistan’s cotton and broader agricultural sector may face a severe crisis.

Foreign Trade Disruptions – The closure of Gulf ports behind the Strait of Hormuz has paralyzed global trade. Two-thirds of Pakistan’s exports to Europe and the U.S., which normally transit this route, have been completely halted for the past 10 days. Pharmaceutical and plastics industries face potential shutdowns due to shortages of raw materials, leaving East Asia as the only active trade corridor.

Diplomatic Pressure and Debt Risks – Hussain notes that Pakistan is under intense pressure to join the conflict. Saudi Arabia’s $3 billion deposit in the State Bank of Pakistan is linked to the continuation of the IMF program, and Riyadh could demand immediate repayment if Islamabad fails to comply or the program falters. Remittances from overseas Pakistanis are ongoing but uncertain.

Conclusion – The journalist argues that Pakistan’s top priority must be to avoid military involvement at all costs, warning that joining a regional war under such economic strain would amount to “absolute suicide.”