ISLAMABAD: Pakistan stands to secure up to $20 billion in short-term economic benefits if the US-Iran conflict reaches a phased resolution and the Strait of Hormuz reopens for normal commercial shipping, according to a new research report by KTrade Securities.

The report positions Pakistan as one of the largest relative beneficiaries among emerging markets due to its strategic geography and intermediary role in regional diplomacy.

KTrade Securities Head of Research Syed Fawad Basir and his team outlined multiple channels for these gains in the June 2026 analysis. These include improved investor confidence, strengthened foreign exchange reserves, and expanded trade activity following reduced regional tensions.

**Key projections detail gains across several fronts.** A 75–150 basis point drop in the country risk premium could lower borrowing costs significantly. Foreign exchange reserves are expected to rise above $20 billion. GCC export recovery could add around $4 billion, while the current account receives an annual boost of $3.75–5 billion.

Lower global oil prices and eased inflation pressures would further support domestic stability. Renewed labour demand in Saudi Arabia could create opportunities for 700,000–800,000 Pakistani workers annually, bolstering remittances.

Pakistan’s economy has faced headwinds from the conflict. Disruptions in the Strait of Hormuz, through which much of Pakistan’s oil imports pass, contributed to higher energy costs and freight rates. The country imports substantial volumes of petroleum products, with recent figures showing imports from Iran alone at around $1.26 billion in 2025, largely mineral fuels.

**Official and market reactions have been measured.** Government officials have welcomed the analysis as highlighting Pakistan’s diplomatic leverage. Islamabad has played a notable role in mediation efforts, hosting talks that contributed to the current fragile ceasefire.

Finance Ministry sources indicated that any sustained de-escalation would align with ongoing efforts to stabilise the external sector. Pakistan’s GDP stands at approximately $452 billion nominally in 2026, with growth projected around 3.7 percent. Remittances, a key pillar, reached $19.7 billion in the first half of FY2026, up 10.6 percent year-on-year.

**Background context underscores Pakistan’s vulnerabilities and opportunities.** The country relies heavily on Middle Eastern energy supplies and hosts millions of workers in Gulf states. A prolonged conflict risked wider current account deficits, as oil prices above $70 per barrel strain the balance of payments.

Bilateral trade with Iran, though modest compared to potential, includes Pakistani exports of rice, cereals, and other goods. Full normalisation could revive stalled projects like the Iran-Pakistan gas pipeline and open new transit routes.

**Market implications appear positive.** A lower risk premium would support debt sustainability and attract fresh investment. Improved reserves would provide buffers against external shocks. Export recovery to GCC countries, hit by previous disruptions, could aid textile and other sectors, which form the backbone of Pakistan’s $40 billion-plus annual exports.

Public and business sentiment has turned cautiously optimistic. Karachi Stock Exchange traders noted potential relief in energy and import-dependent industries. Analysts at several brokerages echoed KTrade’s view on reduced inflation pass-through from global oil markets.

**Strategic implications extend beyond immediate numbers.** Pakistan’s position as a credible intermediary between Washington and Tehran enhances its regional standing. Successful diplomacy could translate into sustained economic partnerships, including expanded energy cooperation and investment inflows.

However, gains remain contingent on the durability of any settlement. The ceasefire holds but faces tests from unresolved nuclear and sanctions issues. Regional actors, including Gulf states, will watch implementation closely.

Experts caution that Pakistan must prepare policy responses. These include accelerating trade facilitation with Iran, diversifying energy sources, and supporting returning or new migrant workers through skill development programmes.

The report estimates combined short-term benefits across risk re-rating, reserves, trade, current account, inflation relief, and remittances could reach the $20 billion mark within the first 12–18 months of normalised shipping and reduced tensions.

**Future developments will depend on diplomatic progress.** Upcoming rounds of talks could clarify sanctions relief timelines and commercial access to the Strait. Pakistani authorities are expected to engage both sides to safeguard economic interests.

For Islamabad, the scenario offers a chance to convert geopolitical relevance into tangible fiscal space. With inflation easing and growth recovering, external stability remains critical for sustaining the current positive trajectory in remittances and reserves.

The KTrade analysis serves as a timely reminder of interconnected risks and rewards in a volatile neighbourhood. Policymakers will likely study its recommendations as they balance immediate stabilisation with longer-term structural reforms.