ISLAMABAD: Pakistan on Monday allowed the import of cheaper and low-quality high-speed diesel (HSD), which it had banned a decade ago.

Additionally, it would dispatch ships through the Strait of Hormuz with Iranian permission to increase diesel imports for the upcoming harvest season.

Informed sources told Dawn that Finance Minister Muhammad Aurang­zeb-led Special Cabinet Committee on Petroleum Prices allowed exemption for import of 500ppm (sulphur particles per million) diesel cargo, which is described as Euro-II/III, in view of tight availability of 10ppm HSD (Euro-5) standard in the market.

Pakistan had banned the import of 500ppm diesel in 2015 with formal effect from 2017 to introduce 10ppm product as its key supplier, the Kuwait Petroleum Company, upgraded its refining. The committee was told that upcoming harvesting season required higher diesel stocks and Euro-5 product was either very expensive or unavailable.

Iranian permission being secured to route imports via Strait of Hormuz

In fact, state-run Pakistan State Oil (PSO) had arranged a large cargo of 500ppm diesel, which was significantly better than production from local refineries. This also envisaged $6-7 per barrel of lower import premium when compared to $26-27 per barrel on 10ppm diesel. The Committee granted temporary relaxation in import specifications.

Moreover, the committee asked the relevant authorities to obtain an approval certificate from Iran for its ships to pass through the Strait of Hormuz to lift products from Kuwait for immediate imports. Such a certification would also reduce insurance costs, as shipping lines require documentation for their premium calculations. Pakistan’s HSD consumption during the April-May harvest is substantially higher than in normal months, and stock build-up was considered important to bolster market confidence and avoid hoarding.

In the long term, the committee noted a proposal on fuel specification and pricing optimisation to enhance efficiency in domestic consumption patterns and support local refining capacity. It was decided that the proposal would be examined further in consultation with stakeholders, including refineries and oil marketing companies, before being brought back for consideration.

An official statement said the committee undertook a comprehensive review of petroleum product stocks, supply arrangements, and import plans, and noted that the current supply position was stable, with diesel stocks providing approximately 23-24 days of cover, while petrol availability remained comfortable. The committee was informed that crude oil stocks currently provide around 11 days of cover, with additional cargoes in transit and committed volumes expected to sustain refinery operations and product availability through April.

The Petroleum Division briefed the committee that import plans for April were being actively managed, with significant volumes already secured through commercial and government-to-government engagements. Refinery operations are being maintained at optimal levels, with efforts underway to maximise throughput and ensure conversion of crude into refined products to support domestic demand.

The committee was informed that international oil markets remain highly volatile and tight, with notable increases in benchmark prices and cargo premiums in recent days. Members noted that prevailing market conditions reflect supply-side uncertainties linked to regional developments, resulting in elevated premiums for both diesel and petrol cargoes.

The meeting reviewed procurement strategies and noted ongoing efforts to secure favourable supply arrangements under existing contracts, including government-backed engagements that offer comparatively lower costs than prevailing spot market rates. At the same time, members emphasised the importance of prudent procurement decisions in light of price variations across suppliers and tightening market conditions.

Operational aspects of fuel imports were also discussed, including shipping arrangements, insurance considerations, and logistical coordination. The committee considered proposals relating to the use of national shipping capacity and agreed that all such arrangements will be guided by commercial prudence, transparency, and the imperative of ensuring uninterrupted supply.

The committee reviewed demand patterns in the domestic market and noted an increase in offtake in recent weeks. Members emphasised the need for close monitoring to discourage speculative stockholding and ensure smooth distribution across the country. Provincial administrations and regulatory authorities have been directed to intensify oversight and enforcement measures to maintain market discipline.

Published in Dawn, March 31st, 2026