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Karachi: Mr. Atif Ikram Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (), warned that ongoing geopolitical instability in the Middle East poses a severe threat to Pakistan’s economy and people. He pointed out that nearly 30% of global petroleum consumption passes through the Strait of Hormuz and emphasized that any prolonged blockage or disruption would trigger massive supply chain shocks, particularly for countries heavily reliant on Gulf energy.
Mr. Ikram Sheikh highlighted how Pakistan is deeply integrated into these supply chains: importing $5.7 billion in crude petroleum annually from Saudi Arabia (around $3.2 billion) and the United Arab Emirates ($2.3 billion). He also stressed that when refined products are factored in, this amounts to $10.71 billion in FY25.
He underscored the country’s vulnerability by highlighting alarming data points necessitating immediate government intervention. The escalating freight costs driven by the Red Sea crisis have forced commercial shipping lines to reroute, adding 15 to 20 days to transit times for Pakistani exports heading to key markets like Europe, the UK, and the United States.
Mr. Ikram Sheikh explained that rising insurance premiums due to war-risk classifications pose a significant threat, threatening to inflate the cost of imported raw materials and erode Pakistan’s price competitiveness in textile and manufacturing exports. To safeguard the national economy, he proposed immediate protective measures, including the establishment of petroleum reserves and contingency agreements with key allies like Saudi Arabia for backup oil supplies.
SVP Saquib Fayyaz Magoon from added that freight and insurance relief through the Ministry of Commerce and State Bank of Pakistan (SBP) must be introduced. A targeted relief package to subsidize exorbitant marine insurance premiums and freight hikes is essential; otherwise, these issues will cripple export earnings.
Mr. Ikram Sheikh stressed the need for maximizing indigenous refining capacity and supporting domestic refineries at their enhanced levels. He called for a localized, resilient strategy that protects energy supplies and keeps export engines running. The stands ready to collaborate with the government to navigate through this geopolitical storm, he concluded.