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Issue

2026 Gulf War Oil Shock

Dossier mark: Improving
Type
Energy & minerals
Impact on US–Pakistan ties
Significant
Status
Improving

Related IranOmanPakistanUnited Arab EmiratesUnited States

Updated

Overview

The 2026 US–Iran war and disruption of the Strait of Hormuz sent oil prices sharply higher. Pakistan, which imports most of its oil through the Gulf, raised petrol prices by 43% and diesel by 55% in April 2026; prices were cut in June after a US–Iran agreement ended the war.

Latest updates

Pakistan cut fuel prices as global supplies eased following the US–Iran deal (reported as the 'Islamabad Memorandum of Understanding')

(Arab News)

Prime Minister Shehbaz Sharif said Pakistan's weekly oil import bill had reached $800 million during the war

(Asia News Network)

Pakistan raised petrol prices by 43% and diesel by 55% overnight, citing war-driven oil prices

(Ada Derana)

Recent developments

The shock tested Pakistan's reserves, inflation and IMF targets, and showed how US military decisions in the Gulf transmit directly into Pakistan's economy. Pakistan's role as mediator between Washington and Tehran gave it a diplomatic stake in reopening the route.

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