Web Desk

ISLAMABAD: When the Strait of Hormuz closed on March 4 following Operation Epic Fury, Pakistan found itself confronting one of its most severe energy crises in decades.&nbsp;The blockade cut roughly 80% of the country&#39;s petroleum imports and nearly all liquefied natural gas supplies, sending Brent crude above $120 a barrel from about $69 the previous year. Officials warned Pakistan held petroleum reserves sufficient for only 10 to 14 days, forcing Islamabad into a race against time to keep fuel flowing without derailing an economy still recovering under an International Monetary Fund programme.&nbsp;While neighboring countries responded by subsidizing fuel to shield consumers from soaring prices, Pakistan chose a different path. Bound by IMF fiscal conditions that prohibited broad energy subsidies, the government imposed sweeping austerity measures, slashed public spending and leaned on the country&#39;s rapidly expanding solar capacity, betting the strategy would preserve economic stability until diplomacy reopened one of the world&#39;s busiest energy corridors.&nbsp;Three months later, after the Islamabad Memorandum of Understanding between the United States and Iran reopened the Strait of Hormuz, the emergency restrictions were lifted. Fuel prices eased, supplies stabilized and Pakistan remained on track to meet its IMF performance targets, offering what officials say is an example of crisis management under severe fiscal constraints.&nbsp;A crisis without easy optionsPakistan entered the crisis with limited room for manoeuvre.&nbsp;Under its IMF Extended Fund Facility and Resilience and Sustainability Facility, the government was committed to maintaining a 1.6% primary fiscal surplus, leaving little scope for untargeted fuel subsidies even as global oil prices surged.&nbsp;Instead of cushioning consumers through government spending, Islamabad attempted to reduce demand.&nbsp;Beginning March 9, the government introduced mandatory remote work across the public sector, a four-day workweek, online university classes, commercial curfews between 8pm and 10pm, reduced fuel quotas at filling stations, restrictions on vehicle purchases, limits on foreign travel and cuts to air-conditioning use across government offices.&nbsp;Petrol prices climbed 42.7% to Rs485 per liter while diesel rose 54.9% to Rs520, reflecting the scale of the supply shock. The government also withdrew 60% of its state vehicle fleet from the roads and ordered Intelligence Bureau audits of official fuel consumption.&nbsp;A different approach from Pakistan&#39;s neighborsPakistan&#39;s response contrasted sharply with those adopted elsewhere in Asia.&nbsp;India reduced fuel taxes, absorbing an estimated $840 million in foregone revenue every two weeks. Malaysia doubled its fuel subsidy allocation to $9.8 billion, while Vietnam and South Africa each forgave hundreds of millions of dollars in monthly tax revenue to soften the impact of higher energy costs.&nbsp;Islamabad concluded that such measures would jeopardise its IMF programme and opted instead to protect fiscal stability while targeting assistance toward the most vulnerable households.&nbsp;The government cut Rs173 billion from its development budget, reduced salary expenditures by Rs27.1 billion and allocated Rs129 billion in targeted relief for lower-income families.&nbsp;Then comes the twist.&nbsp;This is where the story becomes interesting.&nbsp;The unexpected lifelineThe austerity measures alone did not prevent a broader energy crisis.&nbsp;An equally important role was played by Pakistan&#39;s rapidly expanding solar sector.&nbsp;By the time the Strait of Hormuz closed, Pakistan had installed around 35 gigawatts of solar generation, representing roughly 70% of the country&#39;s imported solar capacity between 2021 and 2026.&nbsp;As Qatari liquefied natural gas supplies were disrupted, that solar capacity absorbed much of the country&#39;s daytime electricity demand, reducing pressure on the national grid and helping avoid the widespread industrial blackouts many had feared despite circular debt exceeding Rs5 trillion across the electricity and gas sectors.&nbsp;Diplomacy ends the crisisWhile austerity measures managed domestic demand, Pakistani diplomacy sought to restore supply.&nbsp;On June 17, US President Donald Trump and Iranian President Masoud Pezeshkian signed the Islamabad Memorandum of Understanding, reopening the Strait of Hormuz and ending the Iranian port blockade after more than three months of disruption.&nbsp;Within 48 hours, fuel supplies began normalizing.&nbsp;Petrol prices fell by as much as Rs74 per liter on June 19, while the government ended most emergency austerity measures the following day.&nbsp;Pakistan also established a Petroleum Prices Stabilization Fund, aimed at strengthening the country&#39;s resilience against future global energy shocks.&nbsp;A fiscal testThe crisis ultimately became more than an energy emergency.&nbsp;It became a test of whether Pakistan could navigate a global supply shock without abandoning the fiscal discipline underpinning its IMF programme.&nbsp;According to official assessments, the country met all of its quantitative IMF performance criteria, while inflation was projected at between 11% and 12% and the government&#39;s 4% economic growth target for the 2026-27 fiscal year remained intact.&nbsp;Unlike several regional economies that relied on large-scale subsidies, Pakistan responded through austerity, targeted relief and an expanding renewable energy base. An approach officials argue allowed the country to weather one of the region&#39;s most significant energy disruptions without compromising longer-term fiscal stability.

People crowd a marketplace with shops selling Pakistan's national flags and other items ahead of the country's Independence Day celebrations in Lahore on August 10, 2025. (AFP)

Economy

Pakistan responds to the Strait of Hormuz shutdown with austerity instead of fuel subsidies, relying on emergency conservation measures, expanding solar capacity and diplomacy to navigate a global energy crisis while remaining within IMF fiscal commitments.

How Pakistan weathered Hormuz shutdown without breaking IMF fiscal commitments

HONG KONG: Oil prices tumbled, and stocks soared Monday after the United States and Iran said they had reached a deal to end their war that will reopen the Strait of Hormuz, sending a wave of relief through global markets. The two sides confirmed an announcement from mediator Pakistan, with a signing ceremony set to take place in Switzerland on June 19, bringing an end to three months of conflict that has sent energy prices soaring and revived fears of another inflation spike. The Strait -- a vital maritime chokepoint through which roughly 20% of the world&#39;s crude oil supply transits -- was effectively closed by Tehran soon after US-Israel strikes on Iran kicked off the conflict on February 28. &quot;The Deal with the Islamic Republic of Iran is now complete,&quot; US President Donald Trump wrote on social media Sunday as he marked his 80th birthday. &quot;I hereby fully authorize the toll-free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. &quot;Ships of the World, start your engines. Let the oil flow!&quot; Iran&#39;s Deputy Foreign Minister Kazem Gharibabadi then said on television that the deal put an &quot;immediate end&quot; to the war and that talks on a &quot;final agreement&quot; will be held within two months. The content of the agreement, which follows weeks of fraught negotiations and periodic threats from Trump of fresh hostilities unless Iran reached a deal, remained unclear. Crude prices tanked as much as 5% Monday, with West Texas Intermediate approaching $80 a barrel for the first time since the start of March. Brent was down more than 4% at around $83.60. Both main contracts have come down since their initial surge past $110 soon after the conflict started. The sharp drop in oil costs soothed growing concerns that soaring inflation could force central banks to begin hiking interest rates again. Data last week showing a jump in US May consumer prices -- coupled with strong job creation -- had ramped up bets on the Federal Reserve tightening before the end of the year. &quot;Oil down takes the inflation impulse down. Lower inflation risk takes some of the Fed-hike premium out of the curve. Lower yields give duration and growth equities room to breathe,&quot; said Stephen Innes at SPI Asset Management. &quot;The dollar loses a bit of its wartime bid. Crypto, always the fastest animal in the speculative zoo, gets launched by the same liquidity impulse. In one headline chain, the market moves from bunker pricing to reopening pricing.&quot; However, he also said, &quot;This is a first step deal, not a final peace settlement.&quot; &quot;It is a marketable ceasefire framework that kicks the hard problems down the road. Iranian compliance, and Hezbollah quiet.&quot; Asian equities surged, led by Tokyo and Seoul, which added at least 5% thanks to another flood into tech firms, fuelled by last week&#39;s record-breaking $75 billion IPO by Elon Musk&#39;s SpaceX. Taipei was up more than 2%. Japanese tech investor SoftBank, along with chipmakers Tokyo Electron and Advantest, led the way in Tokyo, while chip titans Samsung and SK hynix also chalked up healthy gains in Seoul. SpaceX&#39;s 19% debut rally, which made Musk the world&#39;s first trillionaire, revived investor appetite to pile back into the AI trade, a key driver of record-breaking gains across markets in recent years. Elsewhere in Asia, Shanghai, Sydney, Singapore and Mumbai all rose more than 1% while Manila jumped more than 6%. There were also advances in Hong Kong. Jakarta jumped more than 3% as easing concerns over energy costs provided fresh support to the beleaguered rupiah, which strengthened to 17,700 per dollar, its best level since the end of May. It had touched a record 18,209 earlier this month. London, Paris and Frankfurt rose at the open and US futures pointed to a strong opening on Wall Street. Key figures around 0810 GMT West Texas Intermediate: DOWN 4.9% at $80.70 a barrel Brent North Sea Crude: DOWN 4.4% at $83.47 a barrel Tokyo - Nikkei 225: UP 5.0% at 69,317.50 (close) Hong Kong - Hang Seng Index: UP 0.5% at 24,842.67 (close) Shanghai - Composite: UP 1.6% at 4,096.47 (close) London - FTSE 100: UP 0.4% at 10,512.78 Euro/dollar: UP at $1.1609 from $1.1577 on Friday Pound/dollar: UP at $1.3433 from $1.3416 Dollar/yen: DOWN at 160.10 yen from 160.23 yen Euro/pound: UP at 86.41 pence from 86.27 pence New York - Dow: UP 0.7% at 51,202.26 (close)

A man looks at an electronic quotation board displaying the Nikkei 225 stock prices on the Tokyo Stock Exchange in Tokyo on June 15, 2026. (Photo: AFP)

Business

Crude prices tanked as much as 5% Monday, with West Texas Intermediate approaching $80 a barrel for the first time since the start of March. Brent was down more than 4% at around $83.60.

Crude prices plunge, stocks surge on US-Iran peace deal

Web Desk/AFP

Middle East

Americas

US President Donald Trump urges Saudi Arabia, Qatar and other Muslim-majority nations to normalize relations with Israel through the Abraham Accords as part of Iran peace and regional stability efforts.

Middle East roundup: Trump urges Saudi Arabia, Qatar to sign Abraham Accords in Iran peace deal

HONG KONG: Oil prices fell, and Asian stocks climbed on Monday over hopes a deal between the United States and Iran to open the Strait of Hormuz could be brokered. The price of North Sea Brent crude and West Texas Intermediate slipped close to five percent to $99.41 and $92.49 a barrel, respectively. The United States and Iran appear closer than ever to a deal that would end the war that has ravaged the Middle East since late February, sending energy prices soaring and stoking global inflation. But sticking points in their negotiations have tempered hopes of a swift resolution to restore the transit of oil and gas through the Strait of Hormuz. US President Donald Trump said on Sunday he had informed US negotiators &quot;not to rush into a deal&quot;. &quot;The negotiations are proceeding in an orderly and constructive manner, and I have informed my representatives not to rush into a deal in that time is on our side,&quot; a post to Trump&#39;s official Truth Social account said. Iran&#39;s Tasnim news agency said that, based on their information, key clauses of a possible agreement remained unresolved. One of the main sticking points has been whether Tehran is willing to hand over its stockpile of highly enriched uranium. The release of Iran&#39;s frozen assets held under longstanding US sanctions and whether Lebanon, repeatedly targeted by Israeli strikes, will be included in any peace deal are also key issues. Markets across Asia climbed in early trade on hopes that Washington and Tehran will be able to overcome these hurdles. Tokyo soared more than three percent in early trade on Monday, while Hong Kong and Seoul were closed for public holidays. Shanghai inched upwards, with Taipei, Manila, Bangkok, Jakarta, Singapore, Sydney, and Wellington also climbing. Kuala Lumpur was down 0.1 percent. &quot;The weekend news flow has once again focused on the prospects for a negotiated deal between the US and Iran,&quot; said Chris Weston, head of research at Pepperstone. &quot;According to reports from Donald Trump, a memorandum of understanding has been &#39;largely negotiated&#39;, with details to be announced at some stage soon, although there appears to be limited urgency,&quot; Weston said. Investors will also be keeping an eye on how the US Federal Reserve and its new chief, Kevin Warsh, react to Personal Consumption Expenditures (PCE) data this week, as well as European inflation metrics. &quot;The inflation story remains central to the entire setup,&quot; said SPI Asset Management analyst Stephen Innes. &quot;Investors will receive another critical read on Thursday with the release of the Personal Consumption Expenditures index, the Federal Reserve&#39;s preferred inflation gauge. &quot;After several hotter-than-expected consumer and producer inflation reports earlier this month, markets are increasingly concerned that elevated oil prices and supply disruptions tied to the Middle East conflict are beginning to seep into the broader inflation pipeline.&quot; The conflict erupted after the United States and Israel attacked Iran on February 28, and the Islamic republic responded with missile and drone attacks across the region. The United States and Iran have observed a ceasefire since April 8 while mediators push for a negotiated settlement, although Tehran has imposed controls on Gulf shipping and Washington has blockaded Iran&#39;s ports. Key figures at around 0215 GMT&nbsp;Brent North Sea Crude: DOWN 3.99 percent at $99.41 a barrel West Texas Intermediate: DOWN 4.25 percent at $92.49 a barrel Tokyo - Nikkei 225: UP 3.2 percent at 65,358.97 Shanghai - Composite: UP 0.3 percent at 4123.89 Hong Kong - Hang Seng Index: UP 0.9 percent at 25,606.03 (close) Euro/dollar: UP at 1.1640 from 1.1608 on Friday Pound/dollar: UP at $1.3480 from $1.3441 Dollar/yen: DOWN at 158.86 from 159.13 yen Euro/pound: DOWN at 86.35 from 86.36 pence New York - DOW: UP 0.6 percent at 50,579,70 (close) New York - S&amp;P 500: UP 0.4 percent at 7,473.47 (close) New York - Nasdaq: UP 0.2 percent at 26,343.97 (close) London - FTSE 100: UP 0.2 percent at 10,466.26 (close) Paris - CAC 40: UP 0.4 percent at 8,115.75 (close) Frankfurt - DAX 30: UP 1.2 percent at 24,888.56 (close)

The United States and Iran appear closer than ever to a deal that would end the war that has ravaged the Middle East since late February, sending energy prices soaring and stoking global inflation.

Oil falls, Asian stocks climb on hopes of US-Iran Hormuz deal

ISLAMABAD: The president of India&#39;s main opposition party said Monday that Prime Minister Narendra Modi&#39;s government withheld fuel and commodity price increases until state assembly elections concluded, as back-to-back hikes in petrol and compressed natural gas prices make the lives of average Indians increasingly difficult. <a href="https://www.pakistantv.com/article/opposition-leader-terms-modis-address-travesty-of-democracy-indian-constitution" target="_blank" style="color: rgb(0, 0, 0);" rel="noopener noreferrer">Mallikarjun Kharge</a>, the President of the Indian National Congress party and Leader of the Opposition in the Indian parliament&#39;s upper house, said the ruling Bharatiya Janata Party had concealed the state of the economy from voters ahead of the polls.&nbsp; &quot;The Modi government kept everything hidden from the country until the elections, but once the elections were over, prices of everything increased,&quot; Kharge said in a post on X. State-run fuel retailers raised petrol and diesel prices by ₹3 per liter on Friday, citing surging global crude costs driven by the ongoing war in the Middle East. A second hike in compressed natural gas prices followed on Sunday, the second such increase in a single week, according to the Press Trust of India. &quot;If Modi had raised the prices of petrol, diesel, and other commodities before the elections, he would have suffered significant losses,&quot; Kharge said. &quot;The BJP government and Modi lack foresight.&quot; India imports over 80% of its crude oil, leaving it heavily exposed to supply disruptions in the Middle East. Wholesale inflation rose to 8.3%, a three-and-a-half-year high. It was driven by imported oil and metals costs. Meanwhile, retail inflation climbed to 3.4% in March, up from 3.2% in February, according to Consumer Price Index data. The Reserve Bank of India projected average retail inflation at 4.6% for the current fiscal year, above its 4% target. The IMF put the figure higher, forecasting consumer prices to rise 4.7% in 2026. Economic growth has slowed. The World Bank&#39;s April 2026 India Development Update cut its GDP growth forecast to 6.6% for FY27, down from an earlier projection of 7.2%, citing high energy prices and supply chain disruptions tied to the Middle East conflict. The IMF revised its own 2026 growth forecast to 6.5%. Cooking gas prices on the black market, the only source accessible to millions of domestic migrant workers without formal documentation, increased up to five times their pre-crisis levels, from ₹80 ($0.83) to ₹90 ($0.93) per kilogram to as high as ₹500 ($5.19), according to AFP. India has more than 450 million internal migrants, per government estimates, many of whom told AFP they were preparing to leave cities and return to their home states. &quot;Inflation is continuously rising due to the BJP government,&quot; Kharge said. &quot;The poor in the country are not even able to get the essential goods they deserve.&quot;

Mallikarjun Kharge, President of the Indian National Congress, criticized the government led by Prime Minister Narendra Modi over rising fuel and commodity prices, saying increases were delayed until after elections and citing concerns about the economic 

India

Opposition leader Mallikarjun Kharge says the ruling party concealed economic pressures before state polls; 'once the elections were over, prices of everything increased.'

Indian opposition says Modi govt delayed fuel price hikes until after elections

MUMBAI: Air India said Wednesday it would reduce or cut several international routes over jet fuel price hikes and airspace restrictions due to conflict. The&nbsp;<a href="https://www.pakistantv.com/article/us-israel-war-on-iran-day-75" target="_blank" style="color:#0073e6;" rel="noopener noreferrer">Middle East War</a>&nbsp;since late February and the de facto closure of the Strait of Hormuz have sent aviation turbine fuel prices soaring, raising concerns over carrier profitability and leading to a rise in airline fares. Air India did not give the total number of flights affected, but said it would suspend routes to Chicago, Shanghai, and Singapore among other from certain Indian cities including New Delhi, Mumbai and Chennai between June and August. The airline added that it would also cut the frequency of flights to San Francisco, Paris, Milan and Sydney. Several factors have &quot;significantly&quot; impacted the commercial viability of some flights, the airline said in a statement. &quot;Despite the challenges and beyond these adjustments, Air India will continue to operate more than 1,200 international flights every month.&quot; The Middle East war has proven to be the latest in a series of setbacks for the Indian carrier, whose chief executive resigned in April. Since taking over Air India in 2022, the Tata conglomerate has embarked on an ambitious overhaul, ordering hundreds of aircraft and upgrading its ageing fleet. While the airline has managed to modernize operations and integrate the group&#39;s aviation businesses, it has faced persistent headwinds including aircraft delivery delays and airspace closures by Pakistan in 2025. But the biggest blow to the airline&#39;s image came in June 2025, when&nbsp;<a href="https://www.pakistantv.com/article/father-of-air-india-crash-pilot-seeks-independent-probe" target="_blank" style="color:#0073e6;" rel="noopener noreferrer">Air India Flight 171</a>&nbsp;&ndash; a London-bound Boeing 787 8 Dreamliner &ndash; crashed shortly after take off from Ahmedabad, killing all but one of the 242 people on board and 19 people on the ground.

Air India will suspend and reduce several international routes between June and August as soaring jet fuel prices, regional conflict and airspace restrictions strain the carrier’s profitability and operations.

Articles tagged with "global oil prices"

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How Pakistan weathered Hormuz shutdown without breaking IMF fiscal commitments