In light of the ongoing global tariff war, Pakistan is poised to benefit significantly from a drop in commodity prices, particularly crude oil, RLNG, and coal, potentially saving over $2 billion in its import bill.
According to a review by Topline Securities, the Bloomberg commodity index has fallen by 8 percent in the last three sessions, with crude oil prices (Brent) dropping 14.3 percent to $64.2 per barrel and Richards Bay coal futures declining by 6.1 percent to $88.5 per ton.
The report highlights that if oil prices decrease by $10 per barrel, Pakistan could reduce its oil-related import bill, including RLNG, by approximately $2 to $2.1 billion. Additionally, savings of $250 to $300 million could be realized from coal, LPG, and palm oil if lower price levels persist.
Pakistan imports around 20 million tons of crude and refined oil annually, with a total import bill of approximately $4 billion for RLNG. A $10 per barrel decline in oil prices would save the country about $1.5 billion on petroleum imports alone. Similarly, every $10 per ton decrease in coal prices could lower the coal import bill by $100 million.
The impact of falling oil prices is also expected to influence inflation. A $10 per barrel reduction could lead to a direct decrease in petrol and diesel prices, affecting inflation by approximately 20 basis points.
However, the imposition of 29 percent tariffs on Pakistan’s goods exports to the U.S. poses a potential threat to the textile sector, which constitutes 75 percent of the country’s total exports to the U.S. A decline of 5 to 10 percent in textile exports could result in a loss of $200 to $450 million in the export bill.
While remittances from Gulf countries have historically been affected by oil price fluctuations, the current higher oil prices are not expected to significantly impact remittances. In a worst-case scenario, a 5 percent decline in Gulf remittances could reduce overall remittances by 2.7 percent or about $1 billion.
Despite the challenges posed by global economic tensions, Topline Securities maintains a positive outlook for the Pakistan Stock Exchange (PSX), projecting the index to reach 127,000 by December 2025, with the potential to exceed 150,000 if political stability and successful IMF reviews are achieved. The report emphasizes that local liquidity will support market performance, even as foreign inflows may be affected by uncertainty.
