Oil industry warns Hormuz blockage could trigger fuel shortages, price shock in Pakistan

The oil industry has warned that a prolonged Iran conflict involving the United States and Israel could disrupt Pakistan’s energy supply chain if the Strait of Hormuz remains blocked, and has renewed calls for establishing a strategic petroleum reserve to manage emergencies.

Industry officials said the biggest immediate risks are higher international prices and potential supply constraints if shipping through the strait is affected for an extended period.

They said international diesel prices have risen by around 30% and crude oil by about 12% to 13% over the past two days. One official said that, based only on the recent increase, domestic diesel prices could rise by Rs 40 to Rs 50 per litre and petrol by around Rs 25 per litre.

The officials said the concern is not limited to price pressure, and warned that shortages could follow if imports are delayed or restricted. They said almost all of Pakistan’s crude oil and diesel imports pass through the Strait of Hormuz, leaving the country exposed to disruptions in the route.

Officials familiar with the matter said the government has asked Pakistan State Oil to explore alternative sources for crude oil and diesel imports.

They said the situation has again highlighted the need for a strategic petroleum reserve, noting Pakistan does not have a functional reserve despite dependence on imported oil. They said multiple studies and roadmaps prepared over the years have not been implemented.

The officials said Pakistan currently maintains about 25 days of petroleum product stocks as commercial inventories. They said strategic reserves are typically held by governments or state agencies, are cost-intensive, and are primarily stored as crude oil rather than refined products.