• Aurangzeb asks SBP to meet dollar needs of POL importers
• Petrol, diesel stocks coverage improves to 29 and 26 days

ISLAMABAD: Despite improved stock covers of petroleum products, foreign exchange constraints have begun to crop up in the oil supply chain owing to additional costs from skyrocketing global prices, insurance, import premiums, and freight charges.

The issue was formally raised at a meeting of the Special Cabinet Committee on Monitoring of Petroleum Prices presided over by Finance Minister Muhammad Aurangzeb. The oil industry complained that OMCs’ credit limits in Pakistani currency remained unchanged despite their foreign exchange requirements more than doubling since the beginning of the US-Israel attack on Iran.

These limits were set when petrol and diesel prices in the global market were around $70 and $90 per barrel, which have now risen to over $132 and $190 per barrel, respectively. Similar was the situation with insurance costs, import premiums, and freight charges due to longer-haul voyages. The import premium went beyond $20 from less than $5-6 per barrel.

As a consequence, the commercial banks were not providing full foreign exchange coverage to their import requirements. Led by state-owned Pakistan State Oil (PSO), the industry demanded that the committee and the State Bank of Pakistan (SBP) intervene to increase their credit limits or make any other special arrangements they deem appropriate to ensure foreign-exchange availability for oil imports.

The committee also undertook a detailed review of petroleum product stock positions and was briefed that, despite heightened volatility in international energy markets and evolving regional dynamics, domestic supply remained stable with adequate stocks available across the country. It was noted that despite challenges, both petrol and diesel stocks coverage had improved to over 29 days and 26 days, respectively. Crude stocks had also increased to 14 days while Saudi Aramco had promised to deliver two more cargoes by mid-April.

An official statement said the committee was briefed that global petroleum markets remained “exceptionally tight, with recent increases observed in both benchmark prices and cargo premiums”. Members noted that the prevailing market conditions reflect supply-side uncertainties linked to regional developments, with premiums for upcoming cargoes expected to remain elevated in the near term.

“It was highlighted that rising international prices have significantly increased the landed cost of imports, resulting in larger transaction sizes and placing pressure on existing financing arrangements,” the statement said adding the committee discussed “operational challenges arising from the increased size of Letters of Credit (LCs) and emphasised the need for enhanced coordination between financial institutions and importers to ensure continuity of fuel imports”.

Mr Aurangzeb directed that the matter be taken up with the State Bank of Pakistan and the Pakistan Banks’ Association (PBA) to explore facilitation measures, including temporary enhancements and consortium-based financing where required. The SBP governor assured the committee that any issues relating to prudential limits would be reviewed on priority, while banks were encouraged to adopt flexible approaches to accommodate higher transaction volumes in view of prevailing market conditions.

The Petroleum Division reported that one cargo of crude oil had started discharging, while another vessel was due to arrive at the Karachi harbour within hours. Additional shipments remain in transit, and further import arrangements for March and April are being actively managed to reinforce national reserves. Refinery throughput was also expected to improve as incoming cargoes are processed, with efforts underway to optimise production levels across facilities.

The committee also reviewed demand patterns in the domestic market and noted indications of elevated offtake in recent weeks. Members emphasised the importance of close monitoring to discourage speculative stockholding and ensure that fuel availability remains smooth across the distribution network. Provincial administrations and regulatory authorities have been directed to intensify oversight, including inspections and enforcement actions where necessary.

In view of the upcoming Eid holidays and the ongoing harvesting season, the committee reviewed supply continuity arrangements and was informed that OMCs will maintain operational readiness to meet demand. It was reiterated that depots will remain functional in line with commercial requirements, and no disruption in fuel availability is anticipated during this period, the statement said.

The meeting also reviewed progress in strengthening monitoring mechanisms, including the development of a digital dashboard to improve real-time visibility into stock levels and supply conditions. The Finance Minister emphasised the need for timely data integration and directed all stakeholders to ensure prompt sharing of information to support informed decision-making.

Members were also briefed on ongoing engagements with international partners to diversify supply sources and mitigate potential disruptions. It was noted that discussions with key suppliers, including under government-to-government arrangements, were progressing, with additional volumes expected to strengthen supply security in the coming weeks.

Published in Dawn, March 19th, 2026