Why Pakistan Could Face A Massive Fuel Supply Crisis in Coming Weeks

Pakistan’s oil industry has asked the State Bank of Pakistan to extend a temporary import relaxation to avoid potential fuel supply disruptions, citing ongoing global uncertainty and high shipping risks.

The Oil Companies Advisory Council, representing over three dozen oil firms and refineries, has requested a two month extension or continuation until market conditions stabilize, as the current facility is set to expire on May 10.

The relaxation allows companies to import petroleum products on a cost, insurance, and freight basis, helping them manage risks linked to volatile global conditions.

The facility was initially granted for 60 days after the industry flagged serious challenges in securing marine and war risk insurance amid rising geopolitical tensions in the Middle East.

Shipping routes through the Persian Gulf and the Strait of Hormuz have become increasingly risky following the US Israel conflict with Iran, forcing insurers to either withdraw coverage or sharply increase premiums.

The industry said the temporary relief had been critical in enabling refineries and oil marketing companies to secure fuel cargoes during a period of extreme uncertainty.

However, it warned that conditions have not improved, with insurance costs still high, freight rates elevated, and shipowners and suppliers remaining cautious. The council said ending the relaxation at this stage could disrupt fuel supply chains, particularly as demand is expected to rise in the coming months.