Pakistan Braces for Economic Strain as Strait of Hormuz Closure Threatens Fuel Supplies
Karachi, Pakistan – Pakistan is scrambling to mitigate a looming energy crisis triggered by the closure of the Strait of Hormuz, a vital waterway for global oil transport. The country, already facing significant economic challenges, now risks severe fuel shortages with current petrol and diesel stocks sufficient for only around 28 days, according to Finance Minister Muhammad Aurangzeb. Crude oil reserves stand at a mere 10 days, and LPG supplies at 15.
The crisis stems from Iran’s Islamic Revolutionary Guard Corps (IRGC) declaring control over the Strait of Hormuz, restricting passage to vessels from the United States, Israel, Europe, and their allies. This action, taken amid a joint military operation by the US and Israel against Iran, effectively disrupts a critical supply route. Roughly one-fifth of the world’s oil travels through the strait, making it a cornerstone of global energy markets.
Pakistan heavily relies on diesel imports from Kuwait, all of which must transit the Strait of Hormuz, according to reports. The government is now considering measures reminiscent of the COVID-19 pandemic to curb fuel consumption, including mandatory work-from-home policies and a shift to online classes. Corporations may be encouraged to implement two days of remote work weekly, with only essential staff required in offices. Ride-sharing initiatives are also being explored.
The Shehbaz Sharif government is also contemplating a weekly revision of petrol pricing, alongside compensation for oil companies facing increased insurance and import costs.
The situation is particularly precarious for Pakistan, which is already grappling with a conflict with Afghanistan and a struggling economy. Foreign Minister Ishaq Dar recently engaged with Iranian officials, attempting to convey concerns that Pakistan’s defense agreement with Saudi Arabia could inadvertently draw them into the wider conflict.
The Strait of Hormuz, a narrow channel between Iran and Oman connecting the Persian Gulf to the Arabian Sea, is approximately 55 kilometers wide at its narrowest point. Its strategic importance to global energy trade cannot be overstated.