- Oil prices jump 7 percent on fears of disrupted Middle East exports
ISLAMABAD: Prime Minister Shehbaz Sharif has formed a high-level committee to monitor any possible economic impact of the escalating conflict between Israel and Iran, a senior government adviser said on Sunday.
“The prime minister has constituted a committee under the supervision of the finance minister, which will monitor the situation,” Khurram Schehzad, an adviser at the finance ministry, told Arab News.
“The committee will assess the impact of the changes and volatility in oil prices on fiscal and external sides, and devise a strategy to pacify the impacts on Pakistan’s economy,” he added.
Oil prices have climbed about 7 percent since Friday, with Brent crude closing at $74.23 a barrel after hitting a session high of $78.50, amid fears of supply disruptions if Middle East tensions escalate further.
Pakistan relies heavily on imported oil, and any sustained spike in prices could widen its current account deficit and push inflation higher at a time when the country is struggling with low foreign reserves and slow growth.
Israel and Iran launched fresh attacks on each other overnight into Sunday, killing scores. The conflict started on Friday when Israel launched a massive wave of attacks targeting Iranian nuclear and military facilities but also hitting residential areas, sparking retaliation and fears of a broader regional conflict.
A 909 kilometer (565 mile) long international boundary separates Iran’s southeastern Sistan-Balochestan province from Pakistan’s southwestern Balochistan province.
“Israel-Iran conflict presents complex challenges for Pakistan as rising oil prices may increase import costs and inflation, influencing monetary policy and growth, while disruptions to key routes like the Strait of Hormuz can affect energy supplies and critical projects,” said Khaqan Najeeb, an economist and former finance ministry adviser.
“It can potentially affect consumer purchasing power and production costs … Possible disruptions to shipping routes and higher freight charges might result in delays to imports and exports, thereby exerting additional pressure on Pakistan’s external sector.”
