Pakistan's stronger buffers help manage global oil price risks, Economic Survey says

Pakistan remains vulnerable to swings in global oil prices due to its reliance on imported petroleum products and crude oil, according to the Economic Survey 2025-26.

The survey said higher prices have historically driven up Pakistan's petroleum import bill, while import volumes reflect domestic demand and economic conditions.

How do global oil prices affect Pakistan's import bill?

Every major spike in global oil prices has raised Pakistan's petroleum import costs. Price movements have historically been the dominant driver of changes in the crude oil import bill, while import volumes reflect domestic demand and economic conditions.

Stronger external buffers, including remittances and foreign exchange reserves, now give Pakistan more capacity to absorb these shocks.

Which periods saw the biggest rises in Pakistan's oil import costs?

The survey identified several periods when global oil prices sharply increased Pakistan's import payments. In fiscal year 2008, a commodity price boom ahead of the global financial crisis pushed crude prices to record highs, raising costs for oil-importing countries including Pakistan.

Import bills rose again in fiscal year 2011, driven by recovering global demand, supply concerns in the Middle East and North Africa, and elevated international oil prices.

A further increase occurred in fiscal year 2018 as rising global prices again pressured the import bill. The largest single increase came in fiscal year 2022, when the Russia-Ukraine conflict triggered a global commodity price shock.

The survey said the price effect accounted for most of the rise in Pakistan's crude oil import bill that year. By contrast, lower oil prices in fiscal years 2015 and 2016 reduced the import bill despite changes in import volumes.

What is driving Pakistan's import growth in fiscal year 2026?

During fiscal year 2026, renewed geopolitical tensions in the Middle East increased uncertainty in global energy markets. However, the survey said import growth that year was driven mainly by non-petroleum goods, reflecting stronger domestic economic activity and greater demand for production-related inputs.

Petroleum imports remained relatively contained, limiting the immediate impact of higher international crude oil prices.

The survey attributed this to delays in the transmission of global prices to import payments, restrained oil consumption, and demand-management measures following domestic fuel price adjustments.

As domestic petroleum prices rose, demand pressures eased and import volumes stayed in check.

How has Pakistan strengthened its ability to manage oil price shocks?

Pakistan entered the latest period of oil price uncertainty with stronger external-sector buffers, supported by workers' remittances, growth in IT services exports, improved foreign exchange reserves, and continued financing from bilateral and multilateral partners. The government closely monitored developments and introduced measures to manage potential risks.

A high-level committee was established to oversee daily fuel availability, arrange additional cargoes if needed, and prevent supply disruptions.

These efforts were supported by fuel conservation and austerity measures aimed at reducing demand pressures while maintaining economic activity. The survey said continued vigilance will be necessary if global oil prices remain volatile or if regional conflicts intensify.

Stronger external buffers, diversified foreign inflows, proactive supply management, and energy conservation measures have improved Pakistan's capacity to manage pressures from global oil price movements.