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As the war rages on in the Persian Gulf and the supply channels get choked, Pakistan has its own dilemma of balancing oil needs. The closure of the strategic Straits of Hormuz by Iran is a cause for concern as more than 25% of global trade navigates through it. Thus, Islamabad seeking an alternate route for supply of oil from Riyadh is on the mark. The Yanbu port of Red Sea is an option, but it is unclear how accessible it is, given that the entire Middle East is engulfed in the war.
The fear of soaring oil prices is already on the board as crude prices have hit $80 a barrel, and likewise the supply of LNG from Qatar to Pakistan also seems in a shambles. The government has already made it clear that it will continue to pass the impact of rising energy prices to the consumers under its existing fortnightly adjustment mechanism to avoid a burden on the national exchequer. That simply means petroleum prices skyrocketing, if a slump in supply sets in.
Pakistan, likewise, has another grave socio-economic concern to address and that is the plight of expatriates, if things go wayward. An estimated 4.5 million Pakistanis are employed in the UAE and Saudi Arabia, and are a major source of foreign remittances to the country to the tune of around $38 billion per annum. The warmongering, coupled with closure of businesses and a slump in trading activities in many of the GCC countries, could adversely impact Pakistan. This is another front that is in need of being managed, and the way out is to assure that serenity sets in earnestly.
Pakistan, being an import-dependent country for its oil and gas needs, is doubly vulnerable to such supply chain disruptions and emergencies like wars and naval blockades. A recent study by a premier think tank, IPRI, has aptly suggested that Pakistan is in dire need of developing “strategic reserves’ storages” as a “national security as well as energy resilience imperative”. This aspect too necessitates some food for thought.
