Pakistan, April 5 -- Geopolitics and economics are no longer distant neighbours but have become deeply entangled, especially for countries like Pakistan whose economic fortunes are bound to global oil markets. The unfolding war involving Iran, the United States, and Israel - and the consequent de facto closure of the Strait of Hormuz - has not only sent shockwaves through global energy markets but threatens to unravel Pakistan's fragile macroeconomic recovery.

The Strait of Hormuz, a narrow waterway between Iran and Oman, is the world's most strategic oil passage. Nearly 20 per cent of global seaborne crude oil and a significant portion of liquefied natural gas (LNG) transit this chokepoint every day in normal times. Before the current c...