Pakistan Lacks Strategic Oil Reserves Amid Global Price Surge

A Middle East conflict that began in February 2026 has triggered a severe economic crisis in Pakistan, characterized by a nearly tripled oil import bill and crude prices reaching 126 dollars per barrel. Musadik Malik, the Petroleum Minister, admitted that Pakistan possesses no strategic oil reserves and only five to seven days of crude supplies, contrasting this with India's 60-70 day buffer. This vulnerability, combined with a U.S. Naval blockade of the Strait of Hormuz, led to a 42.7 percent surge in fuel prices, sparking widespread civil unrest.

To mitigate the crisis, Prime Minister Shehbaz Sharif reduced petrol prices by 80 rupees per litre following backchannel negotiations with the International Monetary Fund to lower fuel levies. Despite these efforts, the government implemented further price hikes on May 1, 2026, leading to a legal challenge in the Federal Constitutional Court requesting a price cap of 200 rupees per litre.

Macroeconomic instability has intensified as the State Bank of Pakistan raised its policy rate to 11.5 percent to counter risks. The Ministry of Finance warned that annual economic losses could reach 50 billion dollars if oil prices hit 150 dollars per barrel, while the national debt-to-GDP ratio has climbed to nearly 70 percent.