Pakistan’s oil supply chain players appeared nervous on Thursday as petrol stocks declined to a 14-day cover, prompting the government to urgently address procedural issues and activate enforcement mechanisms to discourage hoarding and profiteering. The decline comes amid rising prices following renewed US-Iran hostilities, which have disrupted global energy markets and sent import premiums skyrocketing.
Informed sources said the government may have to revert to fuel conservation measures adopted over the past few months as it reviews the latest regional situation. A session with the oil industry was urgently convened by the National Coordination and Management Council, a civil-military body on energy supplies, to holistically review the availability of petroleum products across the country. The committee reaffirmed that petroleum product stocks in the country are sufficient and directed all stakeholders to maintain uninterrupted supply.
Petrol consumption had risen significantly over the past 12 months following a substantial price cut. In the first half of July, petrol consumption was almost 18-20% higher year-on-year, while diesel demand was about 40% higher than in July over the past five years. This reduction in smuggled inflows from Iran due to the narrower price gap. However, subsequent tensions sent import premiums skyrocketing, with Pakistan State Oil’s latest petrol cargoes attracting around $25 per barrel in premiums, compared to $12 just 10 days ago.
As of Thursday, petrol and diesel were estimated to be costlier by around Rs10-12 and Rs40-42 per litre respectively, providing an incentive for dealers to seek greater supplies and for hoarders to profiteer. The Oil Companies Advisory Council had warned the government that delays in customs clearance could materially impact product availability and increase the likelihood of localized shortages, especially in upcountry locations. The council also demanded the immediate disbursement of about Rs67 billion in price differential claims to ensure smooth supplies.
The government has promised to address customs clearance challenges and is considering activating enforcement mechanisms to prevent hoarding. As the situation remains volatile, Pakistan faces the challenge of ensuring uninterrupted fuel supplies while managing the economic fallout of rising global energy prices. The NCMC continues to monitor the situation closely, with the government committed to maintaining stability in the petroleum sector.
