ISLAMABAD: The Government of Pakistan has decided to absorb a financial impact of Rs23 billion to keep petrol and high-speed diesel (HSD) prices unchanged for the week starting March 14, 2026, amid rising global oil prices and regional supply disruptions.
According to official documents, the subsidy will be provided as a price differential to Oil Marketing Companies (OMCs) and financed through the newly created Prime Minister’s Austerity Fund. The payment will compensate OMCs at a rate of Rs75.05 per litre for HSD and Rs49.63 per litre for petrol.
The estimated price differential claims for the period March 14–20 amount to Rs23 billion, which will be disbursed by the Oil and Gas Regulatory Authority (OGRA) after verification and audit of invoices submitted by OMCs.
The Finance Division has already secured cabinet approval for the establishment of the Prime Minister’s Austerity Fund, while the Economic Coordination Committee (ECC) approved the allocation of Rs27.1 billion for the fund. Out of this amount, Rs23 billion will be transferred to OGRA to settle the price differential claims.
Data shows that the import cost of petrol increased by Rs46.89 per litre, rising from Rs190.94 to Rs237.82 per litre. The petroleum levy remains unchanged at Rs105.37 per litre, while the Inland Freight Equalization Margin (IFEM) increased by Rs2.75 per litre from Rs5.85 to Rs8.60.
Similarly, the supply cost of HSD increased by Rs72.41 per litre, rising from Rs257.78 to Rs330.19 per litre. The petroleum levy on HSD remains Rs55.24 per litre, while IFEM increased by Rs2.64 per litre from Rs3.83 to Rs6.47.
Pakistan imports more than 85 percent of its crude oil requirements from Saudi Arabia and the United Arab Emirates via the strategic Strait of Hormuz. However, the escalating conflict in the region has disrupted this key maritime route, creating serious challenges for the country’s energy supply.
To maintain fuel availability, Pakistan has begun exploring alternative import routes, including shipments through the Red Sea, while discussions are also underway regarding potential crude imports from Russia.
The closure of the Strait of Hormuz has also shifted attention to alternative regional pipelines. One is Saudi Arabia’s East-West Petroline pipeline, a 750-mile network transporting crude from Abqaiq on the Gulf coast to the Red Sea port of Yanbu. The second is the UAE’s Abu Dhabi Crude Oil Pipeline (ADCOP), also known as the Habshan–Fujairah pipeline, which spans about 248 miles and has a capacity of nearly 1.8 million barrels per day.
Meanwhile, the regional maritime security environment remains tense as Yemen’s Houthi movement has indicated it may resume attacks on commercial shipping in the Red Sea after a pause of several months.
Amid these developments, the State Bank of Pakistan (SBP), on March 11, 2026, allowed authorised petroleum dealers to import crude oil and petroleum products on a CIF basis for a period of 60 days. The decision was made following a request by the Oil Companies Advisory Council (OCAC), which sought temporary approval to address higher shipping and war-risk insurance costs caused by the ongoing Middle East conflict.
Separately, Minister of State for Petroleum Ali Pervaiz Malik stated on March 9 that importing Russian crude may not be a practical option for Pakistan due to financial and technical challenges. He explained that Russian Urals crude is relatively heavy, while most refineries in Pakistan are older hydroskimming facilities, except for the Pak-Arab Refinery Company (PARCO).
Malik noted that refining heavy crude in such facilities produces large quantities of furnace oil, which faces additional carbon levies under the International Monetary Fund (IMF) Resilience and Sustainability Facility due to its high environmental impact.
Story by Wasim Iqbal
