Pakistan buys costliest LNG cargo in four years as Hormuz disruption triggers energy crunch

Pakistan purchased its most expensive liquefied natural gas (LNG) shipment in approximately four years as it contends with an energy shortage stemming from the Strait of Hormuz closure.According to a Bloomberg report, Pakistan LNG Ltd., a state-owned procurement body, acquired a liquefied natural gas (LNG) cargo for June 6-7 delivery from British oil company BP Plc, through a tender that closed Thursday.A scheduled Qatari shipment was cancelled amid escalating tensions around the Strait of Hormuz, leaving the country with no alternative but to turn to the spot market. Traders with knowledge of the transaction confirmed the cargo was secured at $19.1337 per million British thermal units, the highest rate Pakistan has paid for LNG since 2022.The acquisition marks the country’s second spot purchase in roughly two years, having entered the spot market for the first time in approximately that period only in April.Pakistan is paying a heavy cost of the ongoing Middle East conflict. Roughly one-fifth of global LNG supply remains trapped behind the Strait of Hormuz, which has been effectively closed following a blockade by Iran and the US. As Qatar supplies nearly all of Pakistan's LNG imports, the disruption has triggered rolling blackouts across the country since hostilities commenced in late February.Over the past month, Islamabad negotiated the passage of three Qatari LNG shipments through the strait with Iranian consent, the last of which arrived in late May. While the arrangement has offered some help, inbound volumes remain well below normal levels.Prospects for a near-term resolution appear limited. Peace talks between Iran and the US have stalled, and the current week has seen the sharpest escalation in regional violence since a fragile ceasefire came into force in early AprilHigh inflation from surging energy import costsPakistan's inflation reached a two-year high in May, driven in significant part by surging energy import costs. The consumer price index rose 11.7 per cent year-on-year, in contrast with the 10.9 per cent recorded in April.The inflationary strain has compounded financial hardship for public-sector workers. Leaders of the All Government Employees Grand Alliance (AGEGA) Punjab have called for substantial relief measures ahead of the Federal Budget 2026-27, citing a marked deterioration in the purchasing power of government employees, according to reports.