Pakistan sees relief as falling crude oil prices trim import bill

Falling crude oil prices have started to yield benefits, easing pressure on Pakistan's government to arrange U.S. dollars for imports.

In March 2025, the country’s import bill was reduced by $272 million, aiding efforts to stabilize both the domestic currency and foreign exchange reserves.

The Pakistan Bureau of Statistics released data on petroleum product imports, showing that the March bill had declined to $1.234 billion from $1.506 billion in the same period last year.

Analysts attribute the reduction to falling international crude oil prices, which have receded amid the U.S. trade war with China and other nations. Heightened tariffs, analysts say, could slow global trade and reduce crude oil demand.

Brent crude—the benchmark for most countries, including Pakistan—was quoted at an average of $79 per barrel in January, around $75 in February, and nearly $72 in March. During the first half of March, the average price fell further to about $65 per barrel. Compared with January, crude oil prices dropped nearly 17.7%, offering significant relief for countries like Pakistan that rely heavily on imported crude oil, petroleum products, and liquefied natural gas (LNG).

In March, crude oil imports fell by $203 million, or 23%, to $432 million, while LNG imports declined by $67 million to $226 million. However, petroleum product imports—including diesel and petrol—rose 1.14% to $500 million.

Lower prices encouraged oil marketing companies to import more petroleum products, leading to a 10.5% increase in volume to 912,534 tons.

“As an import-driven economy with significant oil dependence—accounting for 29% of the total import bill—this situation bodes well for Pakistan, offering relief on both the external account and inflation fronts," said Muhammad Awais Ashraf, Director Research at AKD Securities.

A $10 per barrel decline in oil prices is expected to trim the country’s import bill by $2.1 billion.

Meanwhile, the correlation between oil prices and remittances from Gulf Cooperation Council (GCC) nations remains weak. The decline in crude oil prices would also lower Pakistan's inflation forecast for fiscal year 2026 by 36 basis points, Ashraf said. However, if the government chooses not to pass on the benefits to consumers, it may instead raise the petroleum levy by PKR 18 per liter, he added. This could provide fiscal space to either boost revenue by 0.3% of GDP or reduce electricity prices by an additional 9.3%.

Faisal Shaji, chief strategist at Standard Capital, noted that Pakistan briefly recorded a real current account surplus in June 2021.

"Lower Arabian Light prices could be a blessing for Pakistan, allowing it to shrink the real current account deficit and maintain a surplus. This surplus could last for two to three months, easing pressure on the Pakistani rupee and reducing expensive imports," Shaji said.

"Any drop in crude oil prices benefits the country by lowering the import bill and stabilizing the local currency," said Ali Nawaz, CEO of Chase Securities.

Tax expert Amayed Ashfaq Tola said falling crude oil prices act as a "silent stimulus" for Pakistan’s economy by reducing the import bill, easing inflationary pressures, and narrowing the current account deficit, ultimately strengthening macroeconomic stability.

“However, the actual impact will only reach the public when the Pakistani rupee is revalued to its real value, which will lower inflation and further reduce interest rates,” he said.