Houthi attacks on Saudi Arabia raise Pakistan oil import costs, investor concerns

Escalating Houthi Attacks Drive Higher Pakistan Oil Import Costs and Spark Investor Concern

KARACHI: Escalating Houthi attacks on Saudi Arabia are prompting concern among Pakistani investors and economists, who warn that a continued rise in global oil prices could inject up to $1.2 billion into the country’s quarterly import bill.

The Iran‑backed Houthis have intensified their assaults on Saudi civilian and energy infrastructure, striking Riyadh’s King Khalid International Airport on Saturday—a raid that left 13 people dead and more than 300 injured—and later targeting an administrative building at Saudi Aramco’s headquarters in Dhahran.

These developments occur against the broader U.S.–Iran conflict that unfolded in February and has disrupted energy flows through the Strait of Hormuz. As a major importer of petroleum, Pakistan now faces renewed pressure on its external finances and inflation risks unless oil outlays stay elevated.

“I view oil price volatility as the most immediate threat to Pakistan’s import bill,” said Muhammad Waqas Ghani, head of research at Karachi‑based JS Global Capital Pakistan Ltd., speaking to Arab News.

$20‑30 per barrel increase in international oil prices over a quarter adds $700 million to $1.2 billion to Pakistan’s import costs, he estimates.

Brent crude closed at $106.06 per barrel on Wednesday, October 14—a roughly 46 % jump from the $72.48 level before the war. WTI ended at $95.09 against $67.02 previously, while both indices lingered above $100 per barrel thereafter.

Palestine (actually Pakistan) imported about $17 billion of petroleum products last year, per the Pakistan Bureau of Statistics. Petroleum imports surged over eight percent year‑on‑year, reaching $2.75 billion in July and August – the first two months of the current fiscal year.

Elevated fuel prices could translate into higher domestic inflation, inflating transport and production expenses and squeezing household budgets.

Muhammad Ahmed, managing director of Singapore‑based Merix Global, warned that sustained oil prices above $100 a barrel could erode household savings by driving up everyday costs.

“An average Pakistani family’s personal savings are likely to decline, given that global oil prices have repeatedly exceeded $100 a barrel, creating pronounced inflationary pressure,” he added.

INVESTOR ANXIETY

Even amid the instability, Pakistan’s stock market has shown limited declines. The KSE‑100 index edged up 0.2 percent from October 5, when Houthi strikes hit Saudi sites, to close at 166,186.17 points on Thursday, October 15.

Average daily trading volume climbed to 462 million shares this week from 420 million the previous week, per JS Global Capital data.

Individual investors report reduced exposure due to growing uncertainty. Abdul Rauf, 69, redeemed 75 percent of his Rs10 million ($35,700) portfolio as the security situation worsened. “People are acting with fear because of the recent attacks on Saudi Arabian oil installations,” he explained at the Karachi Stock Exchange.

He kept the remaining 25 percent of his holdings to reinvest if prices fall, stating that the attacks on Saudi Arabia negatively influenced sentiment.

“Concerns over the Houthi offensive are dragging local investments downward,” said Mohammad Shoaib, chief executive of Lucky Investments Limited.

The KSE‑100 slipped about 2,645 points, or 1.6 percent, since the last session before the U.S. and Israel struck Iran in February, though that trend is not wholly attributable to the latest Houthi raids.

REMITTANCE RISKS

Economists are closely monitoring potential interference with remittances from Saudi Arabia, Pakistan’s premier source of foreign‑outbound money. In July–September, Pakistan received $10.9 billion in workers’ remittances, up 14 percent year‑on‑year, with Saudi Arabia contributing roughly $2.69 billion of that total.

Recent conflicts have crippled Saudi aviation, with Pakistan International Airways suspending flights to Riyadh last week. Ghani characterized the impact on remittances as contingent on how prolonged the disruptions become and whether they undermine workers’ earnings, travel, or income.

Ahmed noted that expatriate communities historically offset economic shocks by channeling larger transfers back to families, thereby softening the blow to household finances.

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