The Pakistan Stock Exchange (PSX) benchmark index fell 347 points on Friday, halting a brief two-session recovery rally.
The sell-off was driven by a rebound in international oil prices, which prompted investors to book profits ahead of the weekend close.
Negative sentiment spread across the market as traders reacted to the higher energy costs.
The price increase in crude oil typically pressures emerging market equities by widening current account deficits and fueling inflationary expectations, leading to a cautious stance among local investors.
The decline marks a reversal of recent gains, highlighting the fragility of the market's upward momentum.
With global energy prices remaining volatile, the PSX faces continued headwinds that could limit near-term upside potential for the broader index.