Pakistan Faces Rising Oil Supply Risks as Middle East Crisis Deepens

ISLAMABAD: Pakistan is facing growing pressure on its petroleum supply network as escalating conflict in the Middle East disrupts traditional oil routes and raises the cost of securing future cargoes. Officials say supplies are continuing for now, but arrangements for November are expected to be significantly more difficult and expensive as the country searches for alternative sources and transport routes.

A substantial share of Pakistan's imported oil normally comes from Saudi Arabia. The closure of the Strait of Hormuz has already restricted a major maritime route, while disruption along the Red Sea has complicated an important alternative. In August, three oil cargoes arranged for Pakistan were stopped by Houthi forces before being released after Pakistani authorities sought Iranian intervention, according to officials familiar with the supply situation.

The government is now examining ways to reduce reliance on disrupted Gulf routes. Options under consideration include supplies through Oman and Fujairah, while crude purchases from Libya, the United States, West Africa and Kazakhstan are also being evaluated. Diversifying suppliers has become increasingly important because higher international oil prices and longer transport routes could require Pakistan to spend more foreign exchange on energy imports.

Logistics remain a major challenge. Pakistani ports do not have sufficient draft to accommodate very large crude carriers, limiting the country's ability to receive some large shipments directly. Officials are therefore considering positioning a US-origin very large crude carrier near Sohar in Oman or off the Hub coast and transferring the oil to smaller vessels through ship-to-ship operations. Cnergyico is currently the only local refinery able to berth a vessel of roughly twice the conventional size at its single-point mooring facility.

Despite the regional disruptions, authorities say Pakistan's petroleum supply chain remains operational. Petroleum Minister Ali Pervaiz Malik has said Saudi supplies are currently unavailable because of the disruption affecting oil infrastructure and routes, while a Pakistani vessel has been placed on standby. The Petroleum Division says national petroleum inventories currently provide more than 20 days of cover, giving authorities a temporary buffer as alternative arrangements are pursued.

The pressure is already being felt by consumers. Over roughly two months, petrol prices have increased by about Rs68 per litre and diesel by around Rs57 per litre. Industry officials say freight charges and war-risk insurance premiums have risen three to four times as shipping companies factor in heightened security threats, rerouting requirements and risks associated with operating near conflict-affected waters.

Attention is now focused on securing November cargoes. Industry sources say prices being quoted for shipments during that period are substantially higher, increasing the risk of additional pressure on Pakistan's import bill and domestic fuel costs. Any sustained rise in energy costs could also affect transportation, industrial activity and broader inflation if higher import and logistics expenses continue to feed through the economy.

Officials are working on alternative sourcing and shipping arrangements in an effort to avoid interruptions. The petroleum minister has expressed confidence that contingency measures can keep the supply chain functioning. The effectiveness of those plans will depend on the availability of replacement cargoes, shipping capacity, regional security conditions and Pakistan's ability to manage the higher foreign-exchange cost of imported fuel.