Pakistan weathers energy shock, Aurangzeb warns of Gulf risks

Pakistan weathers energy shock, Aurangzeb warns of Gulf risks

Pakistan has managed to avoid major disruptions from soaring global energy prices triggered by the US-Israeli war on Iran, but continued attacks on energy infrastructure across the Gulf could threaten its economic recovery, Finance Minister Muhammad Aurangzeb has warned.

Speaking to AFP on the sidelines of the International Monetary Fund (IMF) and World Bank annual meetings in Bangkok on Saturday, Aurangzeb said Pakistan had secured sufficient energy supplies to meet its needs through November and was now preparing for the winter season, when household energy consumption typically rises.

He said the government had handled the immediate impact of the crisis effectively, with no fuel shortages, long queues at petrol stations or law and order problems arising from the energy situation.

Aurangzeb added that Pakistan would avoid purchasing liquefied natural gas (LNG) from the spot market unless absolutely necessary, as such cargoes generally cost significantly more than supplies secured under existing contracts.

Global energy prices have climbed since the United States and Israel launched their war against Iran in February. Tehran’s retaliatory strikes against US allies in the Gulf have disrupted regional energy supplies and heightened uncertainty in international markets.

The situation has become more concerning with renewed fighting in Yemen, where Houthi forces have reportedly targeted Saudi infrastructure, including energy facilities and airports.

Aurangzeb warned that continued attacks on critical infrastructure could delay the region’s economic recovery, even if hostilities ease.

He said the damage caused to energy installations could make a return to normal economic conditions considerably more difficult and prolonged.

Pakistan remains a frequent borrower from the IMF, having entered its 25th programme with the lender since independence in 1947. At least 11 of these programmes have involved outright bailouts.

Against a backdrop of mounting global debt and heightened economic uncertainty, the IMF has urged countries to strengthen their public finances through fiscal consolidation. The lender has stressed that even economies most exposed to the Iran war’s economic fallout need to maintain fiscal discipline to reduce the risk of a future financial crisis.