• Of 19 OMCs, only PSO, GO comply with this obligation
• Petrol, diesel use projected at 1.5m tonnes each in June

ISLAMABAD: In view of the prevailing situation in the Gulf region following the Israeli attack on Iran, the Oil and Gas Regulatory Authority (Ogra) has directed oil companies to maintain the mandatory 20-day fuel stocks.

Ogra has reminded oil marketing companies (OMCs) to remain vigilant during the ongoing crisis and ensure uninterrupted petroleum supplies in the coming days by adhering to the minimum stock requirements under Rule 37 of the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016.

Under these rules, all OMCs operating in the country must maintain at least 20 days’ worth of fuel stocks. However, of the 19 registered OMCs, only the state-owned Pakistan State Oil (PSO) and the Saudi joint venture GO currently comply with this obligation.

Pakistan has around 11,000 fuel stations nationwide, and most OMCs claim that key motor fuels are also stored at these outlets.

Petrol and diesel remain the main petroleum fuels in the country, while jet fuels such as JP-1 and JP-4 are used by civil and military aircraft. The average national consumption of petrol and diesel in June is projected to be about 1.5 million tonnes each, with a similar trend expected in July.

In response to a query, Ogra confirmed that the country currently holds sufficient stocks of petroleum products to meet existing demand.

“However, in view of anticipated future requirements and the prevailing market situation, Ogra has formally advised all oil marketing companies to ensure the maintenance of their mandatory 20-day stock levels, in line with the conditions stipulated in their respective licences,” an Ogra spokesperson said.

Recently, in view of the evolving geopolitical situation, Prime Minister Shehbaz Sharif constituted a high-level committee to monitor petroleum product pricing and supply. The committee, headed by the finance minister, includes senior representatives from key federal ministries, regulatory bodies and energy sector experts.

The committee has already convened its first meeting, with the next session expected in the coming week. Meanwhile, the Petroleum Division has suggested utilising storage facilities at several non-operational power plants, which have capacity for up to one million tonnes of furnace oil, to build reserves.

Sources in the Oil Companies Advisory Committee (OCAC) said the government and industry stakeholders are exploring alternative arrangements to safeguard supplies if the Iran-Israel conflict escalates.

Options under consideration include utilising alternative routes to import oil from Saudi Arabia and the United Arab Emirates (UAE) in case the Strait of Hormuz is closed.

Saudi Arabia’s existing pipeline network, including the East-West Pipeline (Petroline), transports crude oil from the eastern province to the Red Sea port of Yanbu. Similarly, the UAE’s Abu Dhabi Crude Oil Pipeline (Adcop) to Fujairah bypasses the Strait of Hormuz and provides a secure export route.

The Strait of Hormuz handles over 20 per cent of global crude oil shipments. Any disruption could affect global oil supplies, including Pakistan’s, and trigger a sharp rise in the prices of crude oil and its products.

Meanwhile, the Institute of Cost and Management Accountants of Pakistan (ICMAP) has issued a policy-focused assessment of the potential economic fallout from the Iran-Israel conflict.

The report, published by ICMAP’s Research and Publications Department, commended the government for setting up the committee led by the finance minister to assess emerging economic risks from the situation in the Middle East.

ICMAP’s assessment noted that although the conflict remains geographically limited, its indirect economic impact is already being felt in global energy, trade and financial markets.

For Pakistan, the exposure is significant due to its reliance on imported fuel. The report warns that any disruption in the Strait of Hormuz could push oil prices to between $100 and $130 per barrel.

“This would substantially increase Pakistan’s energy import bill, elevate power generation costs and accelerate inflation. Domestic diesel prices could rise by more than 30pc, with wide-ranging effects on food production, transportation and household expenses,” the report said.

ICMAP has recommended that Pakistan increase its strategic petroleum reserves to at least 90 days of national demand and this buffer could be financed through sovereign sukuk, modelled after successful international practices, to enhance energy security and reduce vulnerability to global supply shocks.

The institute has suggested that the government may adopt Shariah-compliant oil price hedging instruments for up to 30pc of imports to manage exposure to international price volatility.

ICMAP also advocates diversifying oil procurement by pursuing local currency trade agreements with countries such as Russia, Iran and China.

It also recommends reversing recent taxes on solar panel imports and fast-tracking the implementation of the 10,000MW Solar Initiative to promote clean energy and enhance long-term energy resilience.

Published in Dawn, June 22nd, 2025