Pakistan Grapples with Rising Oil Prices and Fuel Supply Concerns

Pakistan is facing significant challenges in securing its fuel supply and managing rising oil prices amid escalating tensions in the Middle East. The government has implemented a record-breaking price hike on petrol and diesel, while simultaneously working to diversify supply routes and conserve existing reserves. These measures come as concerns mount over potential disruptions to oil flows through the Strait of Hormuz due to the conflict involving Iran, the United States, and Israel.

Record Fuel Price Hike

On Friday, the Pakistani government increased the prices of petrol and high-speed diesel by an unprecedented Rs55 per litre. The ex-depot price of petrol now stands at Rs321.17 per litre, and high-speed diesel at Rs335.86 per litre, representing increases of approximately 17% and 20% respectively. This is the highest-ever increase in fuel prices in the country’s history.

Government Response and Mitigation Strategies

Prime Minister Shehbaz Sharif has directed the finance and petroleum ministers to collaborate with provincial governments to develop a strategy for conserving fuel and ensuring uninterrupted supply. Petroleum Minister Ali Pervaiz Malik announced the price increase alongside Deputy Prime Minister and Foreign Minister Ishaq Dar, and Finance Minister Muhammad Aurangzeb.

Key government initiatives include:

• Diversifying Supply Routes: Diplomatic efforts are underway with Saudi Arabia, Oman, and the United Arab Emirates to secure alternative fuel supplies and explore routes beyond the Strait of Hormuz.
• Reserve Management: The government is emphasizing the need for fuel-saving measures to extend the lifespan of existing reserves.
• IMF Assistance: Pakistan intends to request relief from the International Monetary Fund (IMF) regarding the petroleum levy.
• Coordination with Provinces: Enhanced coordination between federal and provincial governments is planned to prevent hoarding at petrol pumps, with a joint dashboard being prepared to monitor fuel reserves.

Potential Economic Impact

Finance Minister Muhammad Aurangzeb has warned that Pakistan’s monthly oil import bill could rise to $600 million due to the ongoing conflict. Crude oil prices could potentially reach $120 a barrel if the conflict escalates further, exacerbating the economic strain.

Provincial Initiatives

Punjab Chief Minister Maryam Nawaz has also reviewed the petroleum supply situation in her province. An agreement was reached to adopt a conservation policy and ensure a continued diesel supply for agricultural use. Authorities have pledged to prevent the sale of petroleum products above prescribed prices and to crack down on hoarding. District administrations and regulatory bodies like the Punjab Enforcement and Regulatory Authority (PERA) have been directed to monitor the situation closely.

Opposition Criticism

The Tehreek Tahafuz Ayeen-i-Pakistan (TTAP) has criticized the price hike as an “economic burden on the public.” TTAP leader Muhammad Zubair questioned the pricing discrepancy, alleging that the government stands to gain approximately Rs110 billion from the increase.

Ministerial Portfolios

Recent cabinet allocations, as of March 7, 2025, include Ali Pervaiz Malik as the Federal Minister for Petroleum. He previously served as Minister of State for Finance, Revenue, and Power, assuming the role of Federal Minister on March 7, 2025.

Looking Ahead

Pakistan’s ability to navigate this challenging period will depend on its success in diversifying fuel supplies, implementing effective conservation measures, and securing financial assistance. Close coordination between the federal government, provincial authorities, and international partners will be crucial to mitigating the economic impact of rising oil prices and ensuring a stable energy supply for the nation.