Oil disruption could push Pakistan inflation to 12%

A new study by the Pakistan Institute of Development Economics warned that any disruption to oil shipments through the Strait of Hormuz could sharply raise inflation in Pakistan. The report said around 20 million barrels of oil pass through the route daily, making it critical for global and regional energy flows.

According to the study, inflation in Pakistan could climb from 8.8% to as high as 12% under a severe supply shock. It added that the country's monthly oil import bill could increase substantially, while the external account could swing from surplus into deficit.

The report also cautioned that shipping costs, insurance premiums, rupee weakness and tax pressures could intensify the impact on domestic prices. PIDE recommended emergency policy steps, closer monitoring of fuel pricing, especially diesel, and supply-chain improvements to reduce vulnerability.