Analysts warn that persistent high oil costs could intensify the pressure on Pakistan’s current account, deepening the country’s balance of payments challenges.

Structural weaknesses and a heavy reliance on imported energy make Pakistan particularly susceptible to external shocks, experts say.

The burden of soaring energy prices is now rippling through the economy, affecting growth, industrial output and foreign exchange reserves.

Oil Price Shock and the Current Account Squeeze

According to the Head of Research at Business Recorder, Ali Khidr, Pakistan’s energy performance relative to GDP remains markedly weaker compared with regional peers such as Bangladesh and India. This inefficiency means the economy is more exposed to fluctuations in global energy prices.

Key industries, including textiles, cement and fertiliser are highly energy‑intensive, amplifying the impact of rising fuel costs. Energy prices have already climbed roughly 60% year on year, and Khidr cautioned that Pakistan’s oil import bill could swell by nearly 50% during the current fiscal year if elevated prices endure.

For every $10 rise in oil per barrel, Pakistan’s annual oil import costs increase by about $1.5 billion, immediately putting downward pressure on the current account a metric that tracks the flow of goods, services and income into and out of the country.


Despite modest reductions in LNG imports thanks to improved domestic gas production, Pakistan still requires three to four monthly cargoes to meet energy needs. Failure to secure these shipments could further dampen economic growth.

Remittances at Risk and External Balances Under Threat

External inflows are also at risk. Khidr warns that prolonged Middle Eastern tensions could depress remittances by 15–20%, as economic uncertainty abroad undermines job prospects for millions of Pakistani expatriates.

The State Bank of Pakistan reports that workers’ remittances totalled $3.3 billion in February 2026, and $26.5 billion from July to February a critical lifeline for the external account. But analysts fear that sustained regional instability could erode this buffer.

 IMF Conditions and Currency Pressures

To stabilise external accounts, Pakistan’s engagement with the International Monetary Fund (IMF) remains crucial. Meeting IMF conditionalities may necessitate further currency depreciation and higher interest rates, slowing domestic demand but strengthening foreign currency reserves.

Saeed Hanif, Head of Research at Ismail Iqbal Securities, noted that petroleum imports account for nearly one‑quarter of total imports, underscoring the economy’s vulnerability to oil price volatility.

While prices near $60 per barrel are considered tolerable, current levels have already eroded external balances, widening the current account deficit.

Hanif estimates that each additional $10 per barrel hike could raise the current account shortfall by approximately $1.8 to $2 billion annually, pushing total impact to $5–6 billion at current price thresholds.

External Financing and Structural Imbalances

Although inflows from multilateral institutions and IMF programmes can bolster foreign exchange reserves in the short term, these measures address liquidity, not structural imbalances, Hanif emphasized.

Credit rating agency Fitch has similarly flagged mounting risks for Asia‑Pacific economies heavily dependent on fossil fuel imports, including Pakistan.

Countries such as India, South Korea, the Philippines and Thailand face significant external balance deterioration under sustained energy shock scenarios.

Pakistan sources around 90% of its oil imports from the Middle East, with strategic and commercial reserves sufficient for less than 30 days of consumption highlighting acute supply vulnerabilities.

With little sign of de‑escalation in regional tensions, economists warn that Pakistan’s current account could deteriorate rapidly, with remittances and external assistance offering limited consolation amid prolonged uncertainty.