Note: This article is based on reporting available as of late March 2026. The situation continues to evolve. This is not financial advice.
The 2026 Iran conflict may seem a remote issue to most people, but for the world's Muslims it will be all important. For the people of the Muslim world the Iranian crisis is not an abstract issue of strategic balance. It is the fuel queues at dawn, the closures of universities during the last days of Ramadan, the mounting cost of staples in the local supermarkets of Cairo and Amman. The countries worst affected by this shock are almost all Muslim states, and the way in which they react to it is of importance to Muslims and non-Muslims alike. It is of particular importance to the people of these countries themselves, but also to anyone else - not necessarily a Muslim - who cares about the developing world and the way in which its people make sense of the issues that matter most to them.
The Exposure Problem: Why Muslim-Majority Economies Are on the Front Line
Many of the world’s most energy-import dependent Muslim-majority countries are staring into a hurricane. From South Asia to the Middle East, many of the region’s biggest economies rely on imported energy – and most of that energy passes through the narrow Strait of Hormuz. According to the IEA, nearly all of Pakistan’s imported LNG comes from Gulf suppliers through Hormuz, while three quarters of Bangladesh’s supply is sourced there too. Indonesia and the Philippines rely on imported crude oil for 60% to 95% of their total consumption. Egypt, Jordan and Tunisia are even more vulnerable to the secondary rounds of inflation and economic shock that could radiate from any conflict.
The effect of direct energy exposure is exacerbated by the effect on currencies. As people worldwide flocked to the US dollar in search of safe haven, the currencies of Muslim-majority emerging economies fell, resulting in dollar-priced oil imports becoming even costlier for local consumers. Indonesia and the Philippines, two of Southeast Asia's most populous countries, were already in a precarious state with their currencies near record lows prior to the beginning of hostilities, according to the Malaysia Institute of Economic Research.
Pakistan: Austerity in the Final Days of Ramadan
In Pakistan, Prime Minister Shehbaz Sharif declared a crisis and imposed emergency austerity measures on national television, saying the disruption to the world's largest oil shipping route through the Hormuz Strait posed a threat to the country's fragile economy. In line with the government’s directives, all public sector departments and offices would operate on a four-hour four-day week with 50% of staff working from home. Schools across the country would open on Thursday as announced earlier for spring holidays. The private sector and market are also asked to keep the shortest hour working week in solidarity.
Pakistan cannot afford to ignore the necessity of this response, as it consumes oil at a level that exceeds 80% of its requirements. The current crisis has produced the largest fuel price increase in the history of the country. Petrol and diesel prices rose by roughly 20% in the span of a week. Furthermore, the rapid escalation in the cost of Natural Gas has created immense hardship for the country. Qatar supplies well over 60% of Pakistan’s requirement of LNG, and QatarEnergy has invoked the Force Majeure clause on its contracts following the strikes on its production facilities at the Ras Laffan complex after a labour dispute turned violent.
Energy experts are saying that Pakistan's crisis is not just a matter of running out of fuel. The real problem, as Al Jazeera is pointing out, is that 80% of the country's petroleum consumption is dedicated to transport. That means that without a serious shift towards alternative fuels and a robust public transit system, Pakistan will continue to be vulnerable to energy crises.
Bangladesh: Fuel Rationing During Eid
Bangladesh, which imports 95% of its energy needs, feels the pain acutely. Petrol pumps in many districts in Bangladesh ran dry within days of the closure of Hormuz Strait. The Bangladesh Petroleum Corporation imposed rationing on the sale of fuel for vehicles and on import of cooking fuel. Universities were even closed. Troops were stationed at oil depots across the country to foil attempts to hoard fuel.
The crisis comes at a particularly bad time for Bangladeshis. The Muslim holidays of Ramadan just ended, and the festive Eid al-Fitr celebration is traditionally a time when people splurge on extra food and travel. Now, however, families are having to pay a premium for both transport and groceries at a time when they were already expecting to stretch their budgets. TIME reports that Bangladesh was running low on fuel reserves, and would have run out within days had the present crisis continued.
Indonesia: Subsidy Pressure and Political Risk
Indonesia is in a tougher spot. Historically it has had domestic supplies of oil, but recently it has become a net importer of energy as its domestic supplies have fallen in line with global declines and its consumption has increased. The government has maintained fuel subsidies recently in an attempt to protect consumers from oil price increases, but the cost to the government has been acute and continues to put pressure on an already under strain budget.
Political Risk – Indonesia. Subsidized fuel could spark further protests in Indonesia, according to the Council on Foreign Relations. Large crowds of protesters, sometimes turning violent, have held demonstrations in the past over fuel prices, including a 1998 uprising that brought an end to dictator Suharto’s regime during the Asian financial crisis. In 2025, cost of living protests turned violent in Indonesia before security forces cracked down on them. Now, as many expect the Indonesian government to reduce fuel subsidies after the Eid celebration, analysts say further demonstrations are likely.
Egypt, Jordan, and North Africa: The Subsidy Dilemma
In a report for Chatham House, Egypt and Tunisia are highlighted as particularly vulnerable among the Arab world's non-Gulf economies, with both states possessing weak fiscal positions and managing the price of energy through government subsidies intended to keep costs for ordinary citizens down in normal times. However, these policies are set to become increasingly unsustainable in the face of a prolonged price shock. Struggling for foreign exchange reserves for some time, Egypt's existing economic challenges are set to be exacerbated by a worsening tourism industry caused by the wave of unrest sweeping the region.
The Hormuz closure is not just straining the budgets of Jordan’s oil importers; it is also placing pressure on the budgets of Jordan’s households as an escalation in oil prices threatens to follow in the wake of disruptions to fertiliser supplies. The countries most at risk from the Hormuz closure, according to the Centre for Global Development, are Pakistan, Bangladesh, Sri Lanka and Egypt, but Jordan too would likely suffer significantly from a sharp and sustained increase in oil prices. Already, as this report highlights, disruptions to fertiliser supplies are placing pressure on food prices throughout the region.
Gulf States: Wealthy but Structurally Exposed
The Gulf Cooperation Council states may seem fortunate to have the Hormuz passage. But with the vast oil resources they possess, they are trapped, unable to use the strait as they will. In fact, Saudi Arabia, the UAE, Kuwait and Qatar, some of the world’s richest oil producers, now find themselves unable to import and export the oil they need, as stuck tankers idle in the vital waterway. Even more alarmingly, their grocery stores stand to go empty, as the countries – Saudi Arabia imports more than 80% of its produce, for example – rely on other countries to stock their shelves. Qatar, for instance, imports 85% of its produce.
Oilfields in the Gulf operating at reduced rates may take weeks or even months to get back to normal after production restrictions caused by a lock-down to open the Gulf strait are lifted, analysts at Rystad Energy said. In addition to a long delay getting production rates back to normal, the temporary shutdown is likely to be followed by an even longer repair period for refinery and LNG processing facilities affected at locations including Ras Laffan.
A Shared Structural Vulnerability — and a Long-Term Imperative
There is much that Muslim-majority economies share: their excessive dependence on imported oil, fragile energy stocks, and inflexible budgets. But, asks the Lowy Institute, how will they cope with an Iran war, just as developing economies are still trying to climb out of the deep hole left by previous shocks to the global economy, from COVID to the Russia-Ukraine war to Trump's tariff war?
Short of drastic global policy changes, the future looks increasingly towards long-term strategies towards clean energy at home. With the current string of crises, energy-importing Muslim-majority countries can no longer afford to delay diversifying away from imports of Hormuz-dependent fossil fuels. For their stability and economic growth, some will adapt faster than others to the possibilities of solar, domestic gas and efficiency.
The timing of this transition is also relevant for investors with exposure to these markets. Islamic finance has a natural role to play in funding clean energy infrastructure across the Muslim world through sukuk issuance, waqf-based green investment and Shariah-compliant infrastructure funds. The crisis has highlighted this opportunity and created greater urgency to address the issue.
Conclusion
For those in the West who worry about the ummah experiencing an energy shock in 2026, rest assured: it’s unfolding right before our eyes – in the daily calculations of whether to spend money on petrol or food; in the desperate meetings of officials who import much of everything and therefore are acutely interested in the price of oil; and in long lines of drivers waiting for their turn to buy fuel, from Karachi to Dhaka. To acknowledge what is unfolding in the world’s most populous and rapidly growing region is to perform an act of solidarity with the Muslim world. It will also be wise in the months and years ahead for investors to understand these unfolding dynamics.
And Allah knows best — آمين
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Nusrat Ahmed
