PSX Under Pressure as Oil Prices Fuel Rate Hike Fears

Key Developments:

• PSX faces fresh selling pressure as oil prices surge
• KSE-100 falls as investors assess inflation risks
• Rate hike concerns grow ahead of Sept 14 SBP meeting

KARACHI (GEO News) — September 11, 2026: The Pakistan Stock Exchange (PSX) remained under pressure on Friday as a sharp rise in international oil prices added to concerns about inflation, domestic fuel costs and the possibility of tighter monetary policy.

The benchmark KSE-100 Index fell to an intraday low of 166,141.17 points, down 2,723.87 points, or 1.61%, from Thursday’s close of 168,865.04. The index later recovered some ground but remained below the previous close, reaching an intraday high of 168,240.89.

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Thursday had already been a difficult session for the market, with the KSE-100 losing 3,078.56 points, or 1.79%, to close at 168,865.04 amid broad-based selling.

Market participants are now assessing the potential economic impact of higher energy costs. Ismail Iqbal Securities Chief Executive Officer Ahfaz Mustafa said the latest pressure was linked to rising international oil prices and their impact on domestic petroleum prices.

Clients queue at a gasoline station in Islamabad, Pakistan, on April 24, 2026. (AFP/File).

“The rise in energy costs will push inflation up, and participants are pricing in a slight chance of a rate hike in the next monetary policy,” Mustafa said.

The concerns come ahead of the State Bank of Pakistan’s Monetary Policy Committee meeting scheduled for September 14. The SBP’s current policy rate stands at 11.5%, after the central bank kept it unchanged at its July meeting.

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A September 9 report by Business Recorder said most market participants expected the policy rate to remain unchanged at the upcoming meeting, although elevated oil prices and inflation risks have reduced the scope for monetary easing. A Topline Securities poll found that 84% of respondents expected no change in the policy rate.

Independent investment and economic analyst AAH Soomro also linked the weak market sentiment to concerns over oil prices and developments affecting regional energy routes.

“Fears over rising oil prices, coupled with potential further escalation between the Saudi govt and the Houthis around the Red Sea, are keeping investors nervous,” Soomro said.

The international oil market has remained a major source of uncertainty for Pakistan. Brent crude briefly climbed to a four-month high of $109.97 per barrel on Friday, following a sharp overnight increase, before easing. Reuters reported that Brent remained on course for a weekly gain of about 11%, with both major benchmarks still above $100.

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The rise in crude prices has already translated into another increase in Pakistan’s domestic fuel prices. The government raised petrol by Rs3.05 per litre to Rs370.80 and high-speed diesel by Rs5.37 to Rs398.04 from September 11. The latest increase followed several earlier adjustments during the week.

The government introduced a daily petroleum pricing mechanism in July as international oil markets became increasingly volatile. The latest increases have added to concerns that sustained energy costs could feed into transportation, production and consumer prices.

Fuel price surge. Design: Ibrahim Yahya.

Regional shipping risks have also increased. Iran-aligned Houthi forces captured Yemen’s strategic Mocha port, raising concerns over traffic through the Red Sea and the Bab el-Mandeb route. At the same time, shipping through the Strait of Hormuz has remained restricted amid continuing attacks and tensions involving Iran and the United States.

For Pakistani investors, the combination of expensive imported energy, higher domestic fuel prices and uncertainty over monetary policy is keeping attention focused on inflation and the broader economic outlook. The direction of oil prices and developments in regional shipping routes are likely to remain important factors for market sentiment in the near term.

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