Paying for oil, again

EDITORIAL: Pakistan’s weekly oil bill surging to around USD 800 million as the Middle East conflict intensifies has once again exposed a structural vulnerability that has been acknowledged repeatedly but rarely addressed with any seriousness. The immediate fallout is already visible. Petrol prices have been raised again, diesel even more sharply, and the familiar cycle of passing global volatility into domestic costs is back in motion. The government’s response has followed a predictable pattern. There is recognition of external pressures, assurances that supply disruptions have been managed and an emphasis on diplomatic efforts to stabilise the region. These are valid and necessary responses in the short term. Pakistan’s role in facilitating talks between the United States and Iran, and in supporting a ceasefire extension, reflects a constructive external posture. The difficulty lies elsewhere. The country continues to react to oil shocks as though each one were an isolated event, rather than part of a recurring pattern. The jump from roughly USD 300 million to USD 800 million in weekly oil payments is not simply the result of a single conflict. It reflects a deeper dependence on imported fossil fuels that leaves the economy exposed to every fluctuation in global markets. This dependence has been highlighted before, often during similar episodes of price volatility. Each time, the same concerns are raised about the need to diversify energy sources, improve efficiency and reduce reliance on imported fuel. Each time, the urgency fades once prices stabilise. The current situation suggests that those lessons have not translated into sustained policy action. The impact extends beyond fuel prices. Higher oil costs feed into transport, production and ultimately inflation. They widen the current account deficit, put pressure on foreign exchange reserves and complicate fiscal management. The increase in petroleum levy to meet revenue targets adds another layer, reinforcing the link between external shocks and domestic economic strain. The contrast between external engagement and internal preparedness is difficult to ignore. Pakistan is actively involved in efforts to stabilise a conflict that is directly affecting its economy. Yet, on the domestic front, there is limited evidence of a long-term strategy to mitigate the very risks that such conflicts create. Energy policy announcements continue to emerge, including initiatives in agriculture, skills development and local production, but a coherent shift away from fossil fuel dependence remains elusive. Reducing this dependence is not a simple task. It requires investment in alternative energy, improvements in grid infrastructure and changes in consumption patterns. It also requires consistency. Short-term measures, such as adjusting levies or managing supply, cannot substitute for a sustained transition strategy. The current crisis offers another opportunity to reassess priorities. Renewable energy, domestic resource optimisation and efficiency improvements have all been discussed as potential solutions. The challenge has been implementation. Without clear timelines, institutional alignment and accountability, these proposals remain aspirational. There is also a question of policy integration. Energy decisions cannot be separated from broader economic planning. Industrial growth, export competitiveness and household welfare are all linked to the cost and reliability of energy. A strategy that reduces exposure to imported fuel would therefore have benefits across multiple sectors. The recurring nature of oil shocks suggests that the issue is not a lack of awareness. It is a lack of sustained follow-through. Each episode highlights the same vulnerability, yet the structural response remains incomplete. As a result, the economy continues to absorb external shocks with limited resilience. Pakistan’s diplomatic efforts in the current conflict may contribute to regional stability, and that is an important objective. But external stability does not automatically translate into internal security unless it is matched by policy adjustments at home. Reducing reliance on fossil fuels is central to that adjustment. The cost of inaction is already evident in the latest round of price increases and the strain on external accounts. Without a clear shift in energy policy, the next oil shock will produce the same outcome. The country cannot afford to treat each crisis as temporary when the underlying vulnerability is permanent. Copyright Business Recorder, 2026

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