Pakistan's external sector remains highly sensitive to international oil prices because of the country's dependence on imported crude oil and petroleum products. Changes in the import bill reflect both price and quantity, but an examination of crude oil imports since FY 2007 shows that major increases have generally been driven by prices. Import volumes, meanwhile, have fluctuated with domestic demand, industrial activity and economic cycles.

According to statistical analyses by financial experts, successive oil price shocks have significantly affected Pakistan's import payments. In FY 2008, the global commodity boom preceding the international financial crisis pushed crude oil prices to record highs, sharply increasing costs for oil-importing countries. In FY 2011, recovering global demand, combined with supply concerns in the Middle East and North Africa, again raised the petroleum import bill. The pattern was repeated in FY 2018 as rising international prices placed further pressure on Pakistan's external account.

The most pronounced increase occurred in FY 2022, following the global commodity shock associated with the Russia-Ukraine conflict. The price effect dominated the increase in petroleum payments. Conversely, lower international prices in FY 2015 and FY 2016 reduced the crude oil import bill despite changes in volumes. These episodes demonstrate Pakistan's vulnerability to external........

© The Nation