Which Countries Are Most Affected by the Middle East Oil Shock?
News Desk
Islamabad: A recent report by The Economist has identified several countries that are most vulnerable to the economic fallout of a global oil crisis triggered by ongoing tensions in the Middle East.
The report notes that following heightened conflict in the region, including attacks involving Iran, the US, and Israel, global energy markets have experienced volatility, with rising oil prices driven by supply concerns.
Disruptions linked to the Strait of Hormuz and reported strikes on oil infrastructure in Gulf states have further intensified uncertainty in international markets.
At the top of the list of countries likely to face the “most painful consequences” is Pakistan. The report highlights that Pakistan’s economy, serving a population of over 240 million, remains heavily dependent on oil imports from Gulf countries.
In response to rising global prices, the government has already introduced austerity measures and fuel conservation plans, alongside a recent increase of Rs55 per litre in petrol and diesel prices announced on March 6.
The publication also warns that Pakistan’s external vulnerabilities extend beyond energy imports. A significant portion of its economy relies on remittances from Gulf-based workers, which contribute around 5% or more to GDP.
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Any disruption in employment or income flows in the Gulf could therefore impact foreign inflows.
Additionally, the country’s foreign exchange reserves remain below International Monetary Fund (IMF) recommendations, covering less than three months of imports.
Alongside Pakistan, the report lists Egypt, Jordan, and Ethiopia among the countries at heightened risk due to their dependence on imported oil and gas from Gulf markets. Jordan’s economic structure is described as similarly vulnerable, given its reliance on external energy supplies and remittances, coupled with high debt levels.
Egypt is also flagged as facing significant pressure, with a weak economic outlook and substantial debt obligations, estimated at around $29 billion due this year, exceeding its available foreign exchange reserves.
While the report suggests that these countries may avoid a full-scale macroeconomic crisis, it cautions that they are still likely to experience considerable economic strain if instability in global oil markets persists.
