Karachi, June 20, 2025 – The Institute of Cost and Management Accountants of Pakistan (ICMAP) has urged the government to build up 90-day oil reserves as a strategic response to the ongoing Iran-Israel conflict, which has triggered serious concerns about regional energy security and economic stability.
In a comprehensive report issued by ICMAP’s Research and Publications Department, the Institute analyzed the economic vulnerabilities facing Pakistan in light of the escalating conflict. The report supports the government’s recent move to form a high-level economic risk committee, chaired by the Finance Minister, to assess potential spillover effects from geopolitical developments in the Middle East.
ICMAP’s analysis emphasizes that while the Iran-Israel conflict has not directly engulfed Pakistan, its global economic ramifications—particularly in energy markets—are profound. Disruption in oil shipments through the Strait of Hormuz, a critical channel for nearly 20% of the world’s oil supply, could drive global crude prices up to $130 per barrel. For Pakistan, this could lead to a 30% surge in diesel prices, heightening inflation and increasing production and transportation costs across sectors.
The report also warns of financial instability stemming from the conflict. Potential depreciation of the rupee, ballooning external debt servicing, and escalating fuel subsidies could erode fiscal space. Exporters are already struggling with higher shipping insurance premiums, which have jumped from $400 to $2,000 per container due to conflict-related uncertainties. Such pressures are expected to hit industrial output in key sectors including textiles, chemicals, and edible oils.
To counter these risks, ICMAP has proposed the formation of a Strategic Economic Task Force, incorporating ministries such as Finance, Commerce, Energy, and Defence, along with the State Bank of Pakistan. This body would be tasked with monitoring developments and formulating a coordinated policy response.
Foremost among ICMAP’s recommendations is expanding Pakistan’s strategic oil reserves from 21 days to 90 days. This would serve as a buffer against supply shocks triggered by the conflict. ICMAP suggests financing this buildup via sovereign Sukuk, following international best practices.
Additional proposals include adopting Shariah-compliant oil hedging, negotiating local currency trade deals with countries like Iran and China, modernizing oil refineries, reversing solar panel taxes, and fast-tracking the 10,000 MW solar energy program.
In conclusion, ICMAP stresses that proactive economic planning is crucial to shield Pakistan from the far-reaching consequences of the Iran-Israel conflict, particularly in areas of fuel security, inflation, and trade continuity.