Rising oil prices may push Pakistan’s import bill up by $8–9 billion

Pakistan’s economic outlook is expected to come under pressure as rising global oil prices could increase the country’s import bill by $8–9 billion, driven by disruptions linked to the Middle East conflict, according to a news report. 

Officials and analysts said higher energy costs are straining external accounts, with limited fiscal space forcing the government to consider demand management and targeted relief measures.

Global oil prices have risen sharply amid regional tensions and supply disruptions, with crude trading around $109 per barrel and Dubai benchmarks at about $135 per barrel, pushing Pakistan’s landed cost close to $145 per barrel.

Additional pressure is expected after Russia announced a temporary halt to gasoline exports from April to July, which could tighten global supply further.

Despite the increase, the government has so far absorbed price shocks by allocating Rs125 billion in relief to keep domestic fuel prices stable, though officials acknowledged the approach is not sustainable over the long term.

Experts have called for a coordinated policy response involving both federal and provincial governments. Proposals include passing part of the price increase to consumers while managing the remaining burden through spending cuts and fiscal adjustments.

Suggestions also include targeted relief for motorcycles, rickshaws and public transport, along with measures such as fuel rationing and the introduction of lower-grade petrol for specific vehicle segments.

Analysts also advised allowing gradual exchange rate adjustments to manage imports and exports amid rising costs better.

Energy experts noted that crude oil prices have increased from around $70 per barrel in February to about $145 in March, while diesel and petrol prices have also surged, potentially doubling Pakistan’s oil import bill.

Discussions between the federal and provincial governments on sharing the financial burden of relief have yet to reach a consensus. The federal government sought Rs200 billion in contributions from provinces, but provinces proposed passing on higher prices to consumers to reduce demand.

Officials said Rs158 billion has been arranged for relief so far, with Rs125 billion already utilised, and remaining funds expected to be exhausted soon.

A proposal under consideration includes maintaining current fuel prices for two- and three-wheelers while allowing increases for larger vehicles, potentially supported by a digital subsidy mechanism.

Policymakers are expected to finalise decisions in an upcoming high-level meeting as the government seeks to balance consumer relief with fiscal stability amid ongoing global uncertainty.