When oil rises sharply in the world market, the effect eventually reaches almost every Pakistani household — through the petrol pump, transport fares and the price of everyday goods. This week gave a sharp example. Brent crude, the main global benchmark for oil prices, settled at $113.17 a barrel on Thursday, 22 October, up 4.00 percent in one day and at its highest level in five months.
Why Oil Jumped This Week
The immediate cause was fear about supply. Attacks by Houthi fighters in Saudi Arabia, against the background of wider Middle East tensions, raised the risk that oil production or shipping in the region could be disrupted. Oil traders react quickly to such risks: even before any actual shortage, prices rise because buyers are willing to pay more to secure supply.
The scale of this year’s rise is remarkable. Brent is up about 86 percent so far in 2026, and its range over the past 52 weeks runs from $58.92 to $118.35 a barrel — meaning oil has, at times this year, cost nearly twice its lowest price. West Texas Intermediate, the American benchmark, is trading around $99 a barrel.
Pakistan’s Problem: We Buy Almost All Our Oil
Pakistan produces only a small part of the oil it uses. The rest — crude oil and refined products such as petrol and diesel — is imported, and every barrel must be paid for in US dollars. This creates two pressures at once when the world price rises.
First, the import bill grows. More dollars flow out of the country for the same quantity of fuel, which strains the country’s foreign exchange reserves — the stock of dollars held mainly by the State Bank. Second, expensive oil feeds inflation at home, because fuel is an input to almost everything: transporting food, running factories, generating power and moving goods between cities.
How the World Price Reaches the Pump
Local fuel prices in Pakistan are not set by petrol pumps themselves. They are determined through a pricing process that starts from the international market: the cost of refined products abroad, converted into rupees at the prevailing exchange rate, with shipping, handling, dealer margins and government taxes and levies added on top.
This mechanism explains the chain reaction. If Brent stays high and the rupee stays near 276.85 to the dollar, the cost of imported fuel in rupee terms rises, and pump prices come under upward pressure at the next review. If oil falls back, or the rupee strengthens, the pressure eases. There is a time gap — world prices move daily, local prices adjust at intervals — but the direction follows.
What to Watch Next
For households and businesses, the questions are simple. Does Brent hold above $110, or was this week’s spike a reaction that fades as tensions cool? And how will fuel-price pressure affect the State Bank’s thinking when its Monetary Policy Committee meets on Monday, 26 October, with market commentary already discussing a possible rate increase? Oil, inflation and interest rates are now linked in one chain — and this week, that chain pulled tight.
Market data: Pakistan Stock Exchange, State Bank of Pakistan and published news reports (figures as of 22 October 2026). Written in our own words for information only — not investment advice.