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For millions of Pakistanis, inflation is no longer an abstract economic term- it is a daily reality reflected in rising fuel prices, higher electricity bills, and increasing costs of basic goods. While domestic factors such as currency depreciation and fiscal constraints often dominate the conversation, a critical external driver is frequently overlooked: geopolitical tensions in the Middle East.
From disruptions in the Red Sea to broader regional tensions, conflicts across the Gulf are sending shockwaves through global energy markets. For Pakistan, a country that imports nearly 90 percent of its crude oil and relies heavily on liquefied natural gas (LNG) from Gulf suppliers, these developments are direct contributors to inflationary pressures at home.
When tensions escalate in key shipping corridors such as the Red Sea, countries like Pakistan absorb rising cost impacts through explosive import bills.
Energy, being central to nearly every sector of the economy, amplifies the effect. Higher oil prices directly increase fuel costs, while more expensive LNG imports raise the cost of electricity generation. Pakistan’s power sector, already grappling with inefficiencies and circular debt, becomes even more strained as input costs rise. The result is a familiar but painful outcome: increased electricity tariffs for consumers and businesses alike.
