Wars in the Middle East are fought with missiles and drones, but their economic shockwaves travel through global oil markets. The latest escalation involving Iran, the United States and Israel has once again demonstrated how quickly geopolitical tensions can destabilise energy markets.

For Pakistan, a country that imports nearly 85 per cent of its petroleum requirements, the consequences are immediate and profound.

Within days, international fuel benchmarks used in Pakistan’s pricing formula surged dramatically. The Platts averages used for the 1 March 2026 fuel price announcement were around $88 per barrel for diesel and $78 per barrel for petrol. By 6 March, those benchmarks had surged to roughly $149 and $106 per barrel, respectively, according to industry market data.

Such volatility is not simply a pricing issue. It is a test of economic discipline, policy credibility, and supply security.

Pakistan imports most of its crude oil from Gulf producers, with shipments passing through the strategic Strait of Hormuz, a maritime chokepoint through which roughly one-fifth of the world’s oil supply flows. Any disruption or perceived threat in this narrow passage instantly raises global prices, increases shipping insurance premiums, and adds uncertainty to supply chains.

For Pakistan, the immediate policy dilemma is familiar: should the government delay domestic price adjustments to shield consumers from rising fuel costs, or should it allow international price changes to pass through the domestic market in order to maintain supply stability?

The answer, though politically difficult, is increasingly clear.

Artificially suppressing fuel prices during global shocks creates fiscal liabilities that quickly evolve into........

© The Friday Times