Pakistan is set to take a series of major measures to keep fuel supplies stable as trade slows following the closure of the Strait of Hormuz.The federal cabinet’s Economic Coordination Committee (ECC) will review proposals including weekly petroleum price revisions, compensating oil companies for higher insurance and import costs, and fuel conservation measures such as mandatory work-from-home policies.State-run Pakistan State Oil (PSO), with government approval, has already launched two import tenders each for petrol and diesel via alternative routes outside the Strait of Hormuz, even though stocks are currently among the highest in the country. Petrol and diesel stocks stand at over 500,000 tonnes each, covering 26 and 25 days respectively. Saudi Arabia has also been asked to supply oil through the Red Sea.Officials said all provincial chief secretaries have been directed to attend a meeting of the newly created 18-member cabinet committee on petroleum prices, scheduled for Thursday. “The meeting will consider mandatory work from home wherever possible for the public and private sectors. The meeting could consider other measures as well, with the coordination of the provinces,” they added.While petrol imports remain largely secure, diesel supplies are more vulnerable as Pakistan relies heavily on long-term shipments from Kuwait, which pass through the Strait of Hormuz. More than 20 percent of global oil cargoes are reportedly stuck in the Strait, creating a shortage of ships for diesel transport.Insurance costs for oil shipments have surged from around $30,000 to $400,000 per ship, with additional import premiums for petroleum products. Freight costs have also risen sharply, from $900,000 previously to over $4 million per ship.“These three factors are exponential and could not be expected of the oil marketing companies (OMCs) and refineries to absorb. Unless properly compensated, OMCs would have sufficient grounds to avoid imports and declare force majeure,” officials said.To address these challenges, a summary to the ECC proposes compensating OMCs for the additional costs and moving from fortnightly to weekly price revisions to ensure fuel costs reflect market realities while preventing fiscal strain on OMCs.“One official said that the price gap has risen to Rs45-50 for diesel and around Rs25-26 for petrol in the first week of the crisis and could grow over the next 15 days, and hence needed to be nipped in the bud.”In response to complaints from dealers about limited supplies, Ogra and OMCs have decided to provide petrol and diesel to dealers based on their respective eight-month sales records. “Still, there was no shortage of petrol or diesel anywhere in the country,” a senior government official said.Ogra reassured the public: “There is no shortage of petroleum products. Citizens are advised not to pay attention to rumours and to rely only on information issued through official channels.” The authority added that temporarily regulating supplies to retail outlets based on historical sales patterns is “a standard supply management practice aimed at maintaining stability in the distribution system.”
