Pakistan Can't Afford the Energy It Imports — and the Iran War Just Made the Bill Worse

Pakistan Can't Afford the Energy It Imports — and the Iran War Just Made the Bill Worse A country that buys 90% of its oil and leans on LNG, fresh off an IMF bailout, is now bidding for spot cargoes at crisis prices. For a fragile economy, the energy shock is a fiscal one. Pakistan's energy problem is, at its core, an affordability problem, and the Iran war has sharpened it. The country depends heavily on imported liquefied natural gas and imports around 90% of its oil and petroleum products from the region, so when Middle East supplies are disrupted and prices surge, Islamabad is left struggling to secure affordable cargoes.² The disruption is not just a question of whether the fuel exists; it is whether a budget-constrained importer can pay the prices the war has produced. It matters because Pakistan has almost no financial cushion to absorb the hit. The country has leaned on IMF support, and a government in that position cannot simply outbid wealthier rivals for scarce cargoes or subsidise the gap indefinitely. When the alternative to paying up is rationing or blackouts, an importer of Pakistan's means faces a genuinely painful choice that better-capitalised buyers in Asia and Europe do not. The energy shock lands on the public finances before it lands on the grid. The immediate response shows the constraint in action. Government-owned Pakistan LNG published a bid request for 0.24 billion cubic metres of fuel, equivalent to three cargoes, to be delivered over several weeks to make up for a loss of Qatari deliveries.¹ Replacing contracted Qatari volumes with spot purchases means buying at whatever the disrupted market charges, and for a country watching every dollar, that switch from cheap long-term supply to expensive spot cargoes is the difference between affordable power and unaffordable power. The reassuring part for the world is the same fact that underlines Pakistan's weakness: its purchases are tiny. Three cargoes amount to roughly 10% of Europe's LNG imports in a single week, and traders said the bid is unlikely to significantly tighten global markets.¹ A volume the world barely notices is a crisis for Islamabad to fund, which is the asymmetry of the shock. The same cargo that is a rounding error on the global balance is a strain on a fragile national budget. The competition Pakistan faces makes the affordability gap worse. It is bidding against deeper-pocketed Asian and European buyers in a market the Iran war has already tightened, and the buyers who can pay the most get the cargoes.² A poorer importer in that contest either pays prices it can ill afford or goes without, and neither outcome is good for an economy already under pressure. The market clears at a price set by the wealthiest bidder, not the most desperate one. The geopolitics adds a bitter twist, because Pakistan is entangled in the very conflict raising its energy bill. Diplomatic negotiations between Washington and Tehran have proceeded with Pakistani intermediation, and crude has stayed elevated as the standoff drags on.³ A country mediating the war that is starving it of affordable fuel occupies an awkward position: its diplomacy and its energy security are hostage to the same unresolved conflict, and resolving one would relieve the other. The longer-term fix is regional, but it is years away and does nothing for the present bill. The Asian Development Bank has announced a $70 billion initiative to expand energy infrastructure across the Asia-Pacific by 2035, aiming to strengthen grid links and boost cross-border electricity trade.⁴ Cross-border power trade would eventually give import-dependent economies an alternative to buying every molecule on the volatile spot market, but a 2035 plan cannot pay for the cargoes Pakistan needs now. The signal to watch is whether Pakistan can keep funding spot purchases or is forced into rationing as the disruption persists.¹ If global LNG stays tight and prices high, a fragile importer faces either an unsustainable subsidy bill or power cuts, and the energy crisis becomes an economic one regardless of how small its purchases look on the world balance.² If the Iran war eases and Qatari deliveries resume, the affordability squeeze lifts quickly. For now, the country that imports 90% of its oil is discovering that the hardest part of an energy crisis is not finding the fuel, but paying for it.^2,1