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Study Warns Pakistan of Economic Risks if Strait of Hormuz Closes
Pakistan Institute of Development Economics warns that closure of the Strait of Hormuz could push inflation to 12%, raise oil import bills, and affect the current account. Urgent policy measures recommended.
ND
by News Desk
2026-03-19
Study Warns Pakistan of Economic Risks if Strait of Hormuz Closes

Pakistan Institute of Development Economics (PIDE) has released a report analyzing the potential economic impact on Pakistan if the Strait of Hormuz, a vital oil shipping route, were to be closed.

The study notes that approximately 20 million barrels of oil pass through the Strait daily, and any disruption could lead to immediate increases in global oil prices. For Pakistan, such a disruption could significantly affect inflation, external accounts, and overall economic stability.

According to PIDE, current inflation stands at 8.8%. In a moderate supply shock scenario, inflation could rise to 10.4%, while severe disruptions could push it as high as 12%. The report also warns that Pakistan’s monthly oil import bill could increase by $384 million, potentially resulting in a $4.6 billion deficit from the annual current account surplus.

The study highlights that 22% of Pakistan’s imports are energy-based. Factors such as shipping costs, insurance, currency depreciation, and taxes could further escalate fuel prices, compounding economic pressures.

To mitigate these risks, PIDE recommends emergency policy measures, emphasizing the importance of diesel for transport, agriculture, and food production. Monitoring fuel pricing, especially diesel, and improving supply chain efficiency are suggested to reduce dependency and cushion the economy against shocks.

The report underscores the need for proactive planning to safeguard Pakistan’s economy against regional disruptions that could have immediate domestic consequences.
Tagged:

inflation

PakistanEconomy

StraitOfHormuz

OilPrices

PIDE
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