ISLAMABAD: Increasing tensions in the Middle East could weaken Pakistan’s remittance inflows from Gulf countries and swell the country’s import bill, a senior official warned on Wednesday as the US and Iran threaten to unravel their fragile peace agreement with a fresh exchange of attacks.
Tensions in the Middle East have surged once again after US President Donald Trump warned that Washington’s interim agreement to end the Iran war is “over.” Trump said the US is likely to launch new strikes on Wednesday night following Iranian attacks on American bases in the Gulf.
Pakistan has already reeled from the Middle East conflict that began in February this year, as higher energy prices and supply disruptions took their toll on the South Asian nation’s economy. Millions of Pakistani citizens reside in the Middle East region, from where they send billions of dollars to the cash-strapped country in the form of remittances every month.
Muhammad Humair Karim, secretary of Pakistan’s Ministry of Economic Affairs, delivered a presentation to a parliamentary committee on the economic implications of the Middle East crisis on Wednesday. Karim told committee members that the GCC accounts for 55 percent of Pakistan’s total remittances, which is roughly equivalent to 4.7 percent of the nation’s GDP.
“If the crisis is prolonged, disruptions in the Gulf economies could weaken remittance inflows to Pakistan,” Karim told Arab News after the briefing. “While at the same time, [it can] increase our import bill through higher energy prices.”
He said the conflict can also disrupt trade routed through GCC logistics hubs, softening demand for Pakistan’s exports to the region.
The official noted that remittances from GCC nations such as Saudi Arabia, UAE, Bahrain Kuwait, Oman and Qatar make these countries a critical source of foreign exchange and a key buffer for the country’s external account.
Karim said any slowdown in economic activity across GCC states could reduce employment opportunities for Pakistani workers, affecting the remittances they send.
On the import side, he warned that a prolonged conflict could keep oil and energy prices elevated, increasing Pakistan’s import bill and causing inflation to surge.
“Pakistan, with limited fiscal space, high external financing needs and dependence on imported energy, is among the countries most vulnerable to a prolonged regional shock,” he said.
Karim highlighted in his presentation that Pakistan imports more than 80 percent of its oil, primarily from Saudi Arabia, the UAE and Kuwait. Any disruption in the Strait of Hormuz passageway, therefore, has an immediate impact on the country’s energy security and external sector.
SURGING OIL IMPORTS, POVERTY
Iran has virtually closed the Strait of Hormuz since the conflict began in February, allowing few commercial vessels to pass through. Before the war began, nearly 20 percent of the world’s oil and gas supplies were shipped through the key waterway.
“The impact was evident during the recent regional tensions, when Pakistan’s weekly oil import bill surged by 167 percent, rising from around $300 million before the conflict to nearly $800 million by the last week of April 2026,” Karim noted.
During the first half of FY2026, petroleum group imports reached $7.98 billion, accounting for nearly one-fifth of Pakistan’s total imports, he added.
“Higher fuel costs continue to exert pressure on inflation, transportation expenses and the overall cost of doing business in Pakistan,” the official said.
Karim said that although the June ceasefire had helped restore commercial shipping through the Strait of Hormuz and Brent crude prices had retreated toward $70-73 per barrel, the near-term outlook remained uncertain.
He warned that renewed hostilities could push 4.3 million people into poverty.
Without taking any names, the official said some of Pakistan’s development partners have offered emergency financing to Islamabad. However, various government departments have said they do not need emergency funds at the moment.
