Pakistan Freezes Petroleum Exports, Weighs Price Controls Amid Global Surge

Islamabad – The Pakistani government has implemented an immediate ban on all petroleum product exports and is actively considering measures to hold domestic fuel prices steady, despite escalating global market costs. This move is supported by an allocation of approximately 389 billion Pakistani Rupees (approximately $1.27 billion USD as of March 12, 2026) from emergency budget reserves to mitigate the impact of rising international oil prices.

Price Increases Loom, But Government Intervenes

Calculations based on current tax rates and the standard pricing formula indicate potential increases of 56 Pakistani Rupees per liter for high-speed diesel and 41 Pakistani Rupees per liter for gasoline. Current retail prices stand at 322 Pakistani Rupees per liter for petrol and 337 Pakistani Rupees per liter for high-speed diesel. Kerosene and light diesel oil are also projected to see price hikes of 7 and 53 Pakistani Rupees per liter, respectively. The regularly scheduled price review was slated for March 15th, but government officials have indicated a possible acceleration to March 13th.

Joint Decision by Government and Military Leadership

Prime Minister Shehbaz Sharif, in a consultative session with federal and provincial officials, stated that he and the military leadership have jointly decided to forgo any further price increases after an initial adjustment, at least in the short term, regardless of fluctuations in Middle Eastern benchmarks. The government will utilize emergency budget allocations to absorb additional cost pressures, recognizing that fuel supply disruptions pose the most significant immediate threat to the nation.

Internal Divisions and IMF Concerns

Despite the Prime Minister’s directive, cabinet members remain divided on the issue. Technocrats, particularly those involved in negotiations with the International Monetary Fund (IMF), have expressed reservations about altering existing pricing buffers. This tension was evident during a recent meeting of the Senate Standing Committee on Finance, where Petroleum Minister Ali Pervez Malik indicated efforts were underway to manage petroleum prices under the Prime Minister’s direction.

Global Market Factors and Supply Chain Challenges

International benchmark Brent crude prices, often referenced in public discourse, are currently influenced by geopolitical factors, including statements related to the conflict in Iran. Still, Pakistan’s oil imports, over 95% of which originate in the Middle East, are more directly linked to Dubai-based Middle East pricing, currently at $135 per barrel compared to $105 for Brent. Dubai prices for petrol and diesel are $120 and $168 per barrel, respectively.

Supply Security Measures

To bolster domestic power generation, the government has prohibited oil refineries from exporting furnace oil and naphtha, responding to disruptions in liquefied natural gas (LNG) imports from Qatar following attacks on its processing facilities. Gas supply to fertilizer plants will be curtailed, and gas rationing may be reinstated after Eidul Fitr to minimize electricity load shedding and conserve foreign exchange reserves. Current petrol and diesel stocks are sufficient for 22-23 days, though diesel imports may face logistical challenges due to longer transportation times from alternative sources.

Increased Informal LPG Imports

Informal supplies of liquefied petroleum gas (LPG) from Iran have reportedly doubled since the outbreak of the Iran conflict, likely driven by cash needs across the border and challenges in formal supply channels.

Key Takeaways

• Pakistan has banned petroleum product exports to conserve domestic supplies.
• The government is considering freezing domestic fuel prices despite global increases.
• A 389 billion Pakistani Rupee emergency fund will be used to absorb price shocks.
• Potential price increases, without government intervention, are estimated at 56 PKR/liter for diesel and 41 PKR/liter for petrol.
• Internal divisions exist within the government regarding the sustainability of price controls.