ISLAMABAD: In response to the ongoing disruptions caused by the closure of the Strait of Hormuz, the Pakistani government is actively devising a series of emergency measures aimed at stabilizing the country’s petroleum market. The slowdown in trade movements through this critical maritime chokepoint has raised concerns about fuel supply security and price volatility, prompting authorities to consider a range of interventions to mitigate the impact on consumers and the economy.
Among the key strategies under review is the shift from the current fortnightly petroleum price adjustment schedule to a more frequent, weekly revision system. This change is intended to allow fuel prices to more accurately and promptly reflect the rapidly changing costs associated with imports, insurance, and freight. Additionally, the government is exploring compensation mechanisms to support oil marketing companies and refineries that are facing soaring operational expenses, including significantly increased insurance premiums and shipping costs.
In tandem with these financial measures, energy conservation initiatives are also being proposed. These include encouraging both public and private sector organizations to adopt work-from-home policies where feasible, thereby reducing overall fuel consumption. This multifaceted approach is designed to ease pressure on fuel demand while maintaining supply chain stability during this period of uncertainty.
A comprehensive summary of these proposals is slated to be presented to the Economic Coordination Committee (ECC) of the federal cabinet for urgent approval. The ECC’s endorsement is crucial as fuel prices have already begun to show signs of sharp increases, which could have broader inflationary effects across the economy if left unchecked.
Meanwhile, Pakistan State Oil (PSO), with government backing, has proactively issued tenders for the import of petrol and diesel through alternative routes that bypass the Strait of Hormuz. This precautionary measure aims to secure fuel supplies despite the current disruptions, even though the country presently maintains relatively healthy reserves. Official data indicates that petrol and diesel stocks each exceed 500,000 tonnes, sufficient to cover approximately 26 days of petrol demand and 25 days of diesel consumption respectively.
In addition to these steps, Pakistan has reached out to Saudi Arabia to explore the possibility of transporting oil via alternative pathways through the Red Sea. This diplomatic engagement reflects the government’s commitment to diversifying supply routes and reducing reliance on the vulnerable Strait of Hormuz corridor.
To ensure coordinated efforts, the federal government has instructed provincial chief secretaries to participate in an upcoming meeting of an 18-member cabinet committee scheduled for Thursday. This committee will closely monitor petroleum prices and deliberate on further measures, including enhanced energy-saving initiatives, to safeguard the country’s fuel supply and stabilize the market.
Despite the relative security of petrol imports, officials have expressed concerns over diesel supplies, which are more susceptible to disruption. Pakistan depends heavily on long-term diesel shipments from Kuwait that transit through the Strait of Hormuz. Compounding this vulnerability is the fact that over 20% of global oil cargoes are currently stranded in the strait, leading to a shortage of available vessels for transporting diesel and other fuels.
The financial strain on oil companies has intensified as well. Insurance premiums for oil shipments have surged dramatically, rising from approximately $30,000 to nearly $400,000 per vessel. Freight and import premiums have also escalated sharply, with shipping costs now exceeding $4 million per shipment compared to less than $900,000 prior to the crisis. These rising expenses are challenging the capacity of oil marketing firms and refineries to absorb additional costs without passing them on to consumers.
To address this, the government is preparing a compensation framework to ensure that fuel importers and distributors can continue their operations without disruption. The introduction of weekly fuel price adjustments will also help minimize the financial gap caused by fluctuating costs, which have already resulted in a price differential of around Rs45-50 per litre for diesel and Rs25-26 per litre for petrol within the first week of the crisis.
While some fuel dealers have reported limited supplies, authorities maintain that there is no actual shortage of petroleum products across the country. The Oil and Gas Regulatory Authority (Ogra), in collaboration with oil marketing companies, has temporarily capped deliveries to retailers based on their average sales over the past eight months. This measure aims to prevent hoarding and ensure equitable distribution during this period of heightened price volatility.
Ogra has emphasized that such supply management practices are standard during times of market instability and has reassured the public that fuel stocks remain within adequate levels to meet demand. This proactive stance is intended to maintain consumer confidence and prevent panic buying.
Separately, Finance Minister Muhammad Aurangzeb convened a meeting of the cabinet committee responsible for overseeing petroleum prices. The session reviewed the country’s reserves of crude oil and refined products, including petrol, diesel, aviation fuel, and liquefied petroleum gas (LPG), alongside consumption patterns and the number of days of supply available.
The committee also examined recent developments in the global energy market, such as fluctuations in benchmark oil prices, rising shipping and insurance costs, and the impact of altered international maritime routes. Members acknowledged that the situation remains fluid and uncertain due to ongoing tensions surrounding the Strait of Hormuz.
Discussions extended to the supply conditions for liquefied natural gas (LNG) and LPG, recognizing that disruptions in shipping lanes could have far-reaching effects on these critical energy sources as well. To mitigate risks, the government is actively exploring contingency plans, including strengthening partnerships with international allies and identifying alternative supply routes through energy hubs and ports in the Red Sea and Gulf regions.
Energy conservation measures were also highlighted as a key component of the broader strategy to manage demand and maintain market equilibrium. Officials stressed that while fuel supplies remain stable for the time being, promoting efficient energy use will be essential to ensuring resilience if global uncertainties persist.
Finance Minister Aurangzeb reiterated that securing uninterrupted petroleum supplies remains the government’s highest priority and will guide all forthcoming policy decisions. Authorities have also vowed to crack down on hoarding, diversion, and smuggling of fuel during this volatile period to protect consumers and maintain market integrity.
Looking ahead, provincial chief secretaries are expected to participate in the committee’s next meeting, where final proposals will be reviewed and a comprehensive nationwide action plan formulated. This plan aims to safeguard Pakistan’s energy supply chain and provide a framework for navigating the ongoing challenges posed by the Strait of Hormuz crisis.
