Pakistan’s diplomatic push amid US‑Iran tensions highlights energy‑security risks for Asian markets
Escalating US‑Iran clashes threaten Hormuz‑chokepoint flows, raising oil and LNG costs for Pakistan and exposing the country’s heavy reliance on Gulf supplies, which could pressure the balance of payments and industrial margins.
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Open on Business Recorder## Geopolitical backdrop
Pakistan is maintaining open diplomatic channels with both the United States and Iran as the two powers clash over the Strait of Hormuz. The conflict has already cut crude flows through the chokepoint to about 4.9 million barrels per day in Q2 2026, down from 21.6 million bpd in Q4 2025, according to the U.S. Energy Information Administration.
## Impact on Asian oil supplies
Kpler data shows Asian crude imports fell to 23.12 million bpd in August 2026, roughly 14 % below the pre‑conflict average of 26.91 million bpd. The disruption underscores that diversifying suppliers does not eliminate vulnerability when a large share of shipments must pass through a single maritime route.
## Pakistan’s exposure
The IMF’s May 2026 assessment notes that 81 % of Pakistan’s fuel imports come from Gulf Cooperation Council (GCC) countries, while 55 % of remittances – about 9 % of GDP – also originate from the Gulf. LNG contracts are similarly concentrated, with 7.5 million tonnes of the 8.4 million tonnes per year tied to Qatari projects.
A prolonged Hormuz disruption would raise imported fuel and freight costs, inflate the import bill, and increase foreign‑exchange demand. The IMF warns that such supply shocks could hurt industrial margins, spur inflation, and heighten balance‑of‑payments risk more than price spikes alone.
## Corporate response
Cnergyico, Pakistan’s largest refiner, has already boosted U.S. crude imports, taking in about 8.1 million barrels over nine months, including roughly 7.1 million barrels (≈ $750 million) in the fiscal year ended June 2026. The firm is evaluating further purchases and plans a second offshore mooring to improve resilience.
## Broader lessons for the region
The episode highlights the need for Asian economies to treat energy security as a system that includes reserves, storage, alternative pipelines, ports, shipping capacity, insurance and coordinated emergency arrangements. Strengthening domestic storage, flexible contracts and regional information‑sharing can mitigate the impact of future chokepoint disruptions.
## Outlook
While Pakistan’s diplomatic role may not resolve the US‑Iran standoff, keeping communication channels open and diversifying supply routes can lessen the probability of a prolonged energy shock that would weigh on the country’s economy and listed companies.
## Key take‑aways
- Oil and LNG price volatility is likely to rise. - Companies dependent on imported fuel, especially refiners, face higher input costs but may benefit from short‑term import diversification. - The broader market could see pressure on sectors sensitive to energy costs, such as Oil & Gas, Power and heavy‑industry manufacturers.