Why Fuel Prices in Pakistan Just Jumped: Understanding the Global Oil Shock

The Government of Pakistan has announced a significant increase in petroleum prices, raising both petrol and high-speed diesel by PKR 55 per litre, amid a sharp surge in global oil prices triggered by escalating conflict in the Middle East involving Iran, Israel, and the United States.

Following the increase, the ex-depot price of petrol has been fixed at PKR 321.17 per litre, while high-speed diesel now stands at PKR 335.86 per litre. The new rates came into effect from March 8 after a high-level government review of the international energy market.

Officials stated that the decision was unavoidable due to rapidly rising crude oil prices in the global market and concerns about potential disruptions to supply routes from the Middle East, from where Pakistan imports most of its petroleum products.

Reasons Behind the Price Hike

The price adjustment primarily reflects the impact of the ongoing Iran-Israel-US conflict, which has shaken global energy markets. The confrontation has disrupted oil infrastructure and shipping routes in the region, particularly around the Strait of Hormuz, through which nearly 20% of the world’s oil supply passes.

The crisis has pushed international crude prices sharply higher, with Brent crude briefly surging above USD 100 per barrel, raising import costs for oil-dependent countries like Pakistan.

Pakistan imports a large portion of its crude oil and refined petroleum products from Gulf states such as Saudi Arabia and the United Arab Emirates. With supply chains threatened by regional instability, the government said domestic fuel prices had to be adjusted to reflect the rising import cost and to prevent shortages.

Economists warn that the increase, amounting to roughly 20% in retail fuel prices, could raise transportation costs and contribute to inflation in the coming months.

Pakistan’s Fuel Stock Situation

Despite the price increase, authorities say the country currently has sufficient petroleum supplies in storage.

• Pakistan reportedly has about 28 days of oil supply available based on existing inventories.
• Oil marketing companies operating in the country are required to maintain at least 20 days of fuel stocks under regulatory rules.

However, Pakistan does not yet maintain large strategic petroleum reserves comparable to many developed economies, leaving it more vulnerable to global supply shocks.

Fuel Reserves in Other Countries

Several major economies maintain larger emergency oil reserves to protect themselves from supply disruptions.

Pakistan: About 20–28 days of supply

India: Around 74 days of total petroleum stocks

IEA Standard for developed countries: Minimum 90 days of imports recommended

China, Japan, South Korea: Maintain large strategic petroleum reserves exceeding or nearing the 90-day benchmark

These reserves allow countries to release emergency supplies during crises to stabilize domestic markets and control price shocks.

Global Concerns Amid the Iran War

The primary fear among energy-importing nations is that the ongoing conflict could severely disrupt oil shipments from the Gulf region.

Key concerns include:

• Closure or disruption of the Strait of Hormuz, a critical oil shipping route.
• Attacks on oil infrastructure, including refineries, pipelines, and export terminals across the Middle East.
• Reduced production or export capacity from Gulf energy producers due to security risks.
• Global inflationary pressure, as rising fuel prices increase transportation and manufacturing costs worldwide.

Energy analysts warn that if the conflict intensifies or shipping routes remain disrupted, oil prices could rise further, forcing additional price adjustments in countries heavily dependent on imported fuel, including Pakistan.

The Impact

Pakistan’s latest fuel price hike reflects growing pressure from global energy markets rather than purely domestic factors. With limited strategic reserves and heavy reliance on imported oil, the country remains highly sensitive to geopolitical developments in the Middle East. As tensions persist, governments worldwide are closely monitoring fuel supplies and preparing contingency measures to safeguard their energy security.