Pakistan Raises Fuel Prices 20% While Fighting a War It Can't Afford

Petrol in Pakistan now costs PKR 321 per litre. Diesel costs PKR 336. On March 7, the government announced a Rs 55 per litre hike on both fuels -- a 20% jump overnight. Finance Minister Ishaq Dar said there was "little choice."

He's right. But the reasons are worse than the number.

Pakistan's paying for two crises at once. An open war against the Taliban on its western border — Day 11, no ceasefire in sight. And an energy shock from a war it isn't even part of: US-Israeli strikes on Iran shut the Strait of Hormuz and cut Pakistan off from its main oil supply route.

Every $10 increase in crude widens Pakistan's current account deficit by $1.5-2 billion. Brent hit $94 on Friday. Three weeks ago it was $68.

The Price of Someone Else's War

Hormuz is all but closed. Tanker traffic dropped 90%, says Noam Raydan at the Washington Institute. Nine commercial ships have crossed since Monday. Trump's $20 billion tanker reinsurance programme hasn't helped — shipowners aren't worried about insurance. They're worried about missiles.

Pakistan imports most of its oil through Gulf corridors. With those shut, Islamabad asked Saudi Arabia to reroute crude via Yanbu, a Red Sea port on the kingdom's western coast. At least one shipment's been arranged. But rerouting an entire supply chain takes time Pakistan doesn't have.

The country has roughly 26 days of fuel reserves. The government's considering weekly price revisions from March 8 — scrapping the fortnightly cycle that gave consumers some predictability. Officials are also weighing remote work mandates and distance learning to conserve fuel.

This isn't abstract. Transport costs ripple through food, medicine, and manufacturing. Pakistan was already running a fragile economy under IMF supervision. The $7 billion bailout agreed in 2024 requires strict fiscal targets. War spending and energy shocks threaten every one of them.

The South China Morning Post reported Pakistan's IMF rescue is now "imperilled" by the border conflict. Add the fuel crisis: Pakistan may have to choose between funding its military and keeping its credit line alive.

A War With No Off-Ramp

On the Afghan border, the fighting hasn't slowed. Pakistani and Afghan forces launched multiple strikes at each other on Friday in what the AP called "the deadliest fighting yet" between the two sides.

The numbers tell two different stories depending on who's counting. Pakistan claims it has destroyed 188 tanks, armoured vehicles, and artillery pieces, targeted 51 locations by air, and killed over 400 Taliban fighters. The Taliban's defence ministry claims 55 Pakistani soldiers killed and 7 border posts captured. Pakistan dismissed Afghan reports of shooting down a Pakistani jet as "totally untrue."

What's not disputed: over 100,000 people have been displaced in Afghanistan. At least 56 Afghan civilians are dead, according to the UN. UNHCR says it needs $454 million in 2026 to manage displaced populations across Afghanistan, Iran, and Pakistan -- three countries all in crisis simultaneously.

The war started with Pakistani airstrikes on TTP camps inside Afghanistan on February 21. The Taliban retaliated with a border offensive on February 26. By March 4, Pakistan's defence minister used the phrase "open war." Nobody has walked it back.

The National Interest asked this week whether the two sides can de-escalate. The answer, based on current dynamics, is no. Neither side has a diplomatic channel open. The US has expressed support for Pakistan's right to self-defence, but Washington's bandwidth is consumed by Iran. No external mediator has stepped forward with a credible proposal.

The Two-Front Squeeze

The two crises feed each other. That's what makes Pakistan's position so dangerous.

Iran war closes Hormuz. Hormuz closure spikes fuel. Fuel strains the economy. The strained economy limits how long Pakistan can fight the Taliban. The war burns ammunition, aircraft sorties, and troop deployments — all costing money Pakistan can't find.

India noticed. The Indian Air Force started exercises near the Pakistan border on March 5, running through March 12. Officially unrelated. The timing says otherwise.

Then there's the lost mediator problem. Before strikes killed Supreme Leader Khamenei on February 28, Iran served as a regional counterweight. Tehran had relationships with both Islamabad and the Taliban. That channel is gone. Iran's interim leadership is consumed by survival. The Assembly of Experts may name a new Supreme Leader within hours, but whoever takes the role inherits a country under bombardment — not one capable of mediation.

Saudi Arabia stepped into the vacuum, but Riyadh's focused on the Iran war, not the Afghan border. It's mediating between Tehran and Washington while managing Gulf security after Iranian missiles hit Qatar, Bahrain, and the UAE.

What Western Media Isn't Covering

The Pakistan-Afghanistan war has nearly vanished from Western headlines. The oil infrastructure strikes in Iran -- IDF hitting Tehran fuel depots, IRGC retaliating against Haifa's refinery -- dominate every front page. The Israeli commando raid in Lebanon's Bekaa Valley. The explosion at the US embassy in Oslo.

Pakistan's crisis is getting buried. Indian and South Asian outlets are covering the fuel hike and its economic consequences in detail. Western outlets ran with the AP's Friday combat report and moved on.

This matters because Pakistan's stability affects 230 million people. It's a nuclear-armed state under simultaneous military and economic pressure, with an IMF programme hanging by a thread and fuel reserves measured in weeks, not months.

The war nobody's watching could become the crisis everybody regrets ignoring.

What to Watch

Three things decide what happens next.

Oil markets Monday. The Iran strikes crossed a line both sides previously respected. If Brent pushes past $100, Pakistan's weekly price model becomes a weekly crisis. Whether the IMF blinks. Pakistan can't meet fiscal targets and fund a war. Something gives. If the IMF suspends or restructures the programme, Pakistan's currency and credit rating take immediate hits. Any ceasefire signal on the Afghan border. So far, none. But economic gravity has a way of forcing conversations that pride won't start.