The Impact of the Strait of Hormuz on Pakistan’s Oil Prices and Economic Stability: A Critical Analysis

Abstract

This paper examines the strategic and economic consequences of disruptions in the Strait of Hormuz on Pakistan's domestic oil prices and on the macroeconomic stability of the country. In Pakistan, where more than 85% of crude oil comes from abroad via the Strait of Hormuz, the price of gasoline has increased 20% as a result of the closure of the Strait of Hormuz. The detachment between supply and demand created by this situation has led to inflation, currency depreciation, and outages; therefore, it is obvious that more effective energy planning and improved economic policy must take place. This research study is based on qualitative methodology is utilized in which the researcher has been utilized on historical, descriptive and analytical methods with data collected from both Secondary and primary resources. The purpose of this research is to analyze the influence that the Straits of Hormuz has on oil prices and overall stability of the economy in Pakistan. There are many reasons for high gasoline prices in Pakistan create issues with the country's trade balance and contribute to rising inflation within industry and for low-income households alike. Waterways in the region, particularly the Strait of Hormuz, are targets of regional conflicts, which could disrupt the transportation of resources, hence, it is critical for Pakistan to have multiple forms of energy at their disposal; develop alternative forms of energy; create s