Pakistan’s energy sector is sounding the alarm over potential sharp increases in petrol and diesel prices if the ongoing conflict in the Middle East escalates further. Industry officials have warned that a prolonged confrontation between Iran, the United States, and Israel could severely disrupt the country’s energy supply chain, creating both price surges and possible shortages. The warnings have revived long-standing calls for the establishment of a Strategic Petroleum Reserve (SPR) to safeguard Pakistan’s energy security during emergencies.
Impact of Middle East Conflict on Pakistan’s Energy Supply
Officials explained that almost all of Pakistan’s crude oil and diesel imports pass through the Strait of Hormuz, making the nation highly vulnerable to any blockade or military escalation in the region. “The situation could become worse than imagined for both supplies and prices if the Strait remains blocked,” said a senior oil industry official. International diesel prices have surged by approximately 30% over the past two days, while crude oil rates have risen by 12-13%. This could translate into a domestic diesel price increase of Rs40-50 per litre and petrol rising by around Rs25 per litre, experts estimate.
Beyond price increases, the officials highlighted potential shortages that could severely disrupt the energy supply chain. The government has reportedly asked Pakistan State Oil (PSO) to explore alternative sources for crude oil and diesel imports. However, even with alternative suppliers, the country remains highly exposed to global oil market volatility, emphasizing the need for a strategic safety buffer.
Strategic Petroleum Reserve: An Urgent Need
The current situation has reignited debates over the long-delayed establishment of a Strategic Petroleum Reserve. Despite Pakistan’s heavy dependence on imported oil, the country is among the few major oil-importing nations without a functional SPR. Over the years, both local and international consultants have prepared detailed reports and roadmaps outlining the benefits and logistics of creating such a reserve. Yet, these recommendations remain unimplemented, leaving Pakistan’s energy security vulnerable to external shocks, sudden supply disruptions, and price volatility.
Officials stressed that commercial reserves, which Pakistan currently maintains for around 25 days of petroleum product stocks, are not sufficient during emergencies. Strategic reserves, in contrast, are typically held by governments or state agencies, involve significant costs, and primarily consist of crude oil rather than refined products. In an increasingly unstable global environment, experts argue that establishing a strategic reserve is not just an administrative measure but a critical step toward national energy security.
The oil sector’s warnings underscore the importance of proactive planning. Without an SPR, any prolonged conflict in the Middle East could trigger steep energy price hikes and supply chain disruptions, directly affecting Pakistan’s economy and daily life.
