ISLAMABAD: Given petroleum import challenges under the prevailing geopolitical conditions, Pakistan on Wednesday allowed the import of crude oil and all petroleum products with advance war-risk insurance for a period of 60 days, on the demand of the local oil industry, to facilitate imports.

“In view of the prevailing situation and the critical importance of crude oil and petroleum products for the country, it has been decided to allow import of crude oil/petroleum products on CIF (cost, insurance and freight) basis for a period of 60 days starting March 11,” said a formal circular issued by the State Bank of Pakistan (SBP) on Wednesday night.

In the circular issued to presidents and chief executive officers of all authorised foreign exchange dealers, the SBP directed that all dealers and their constituents be immediately advised for meticulous compliance.

The oil industry had earlier this week demanded special permission for oil imports, including crude, with unusual war-risk insurance cover for two months as marine shippers were reluctant to provide cargoes. “In the prevailing circumstances, obtaining adequate marine and war-risk insurance cover has become extremely difficult,” the Oil Companies Advisory Council (OCAC) had written to the government, SBP and the Oil and Gas Regulatory Authority.

SBP issues circular to authorised forex dealers for immediate compliance

It reported that this had become evident after Pakistan State Oil’s (PSO) spot tender floated on the Gallop platform on a C&F basis received no bids for petrol, HSD and JP-1 cargoes. In view of the constraints in arranging insurance under C&F terms, the OCAC proposed that imports be temporarily allowed on a CIF basis instead of the present arrangement of cost and freight basis to facilitate fuel imports to ensure a smooth supply chain under extremely volatile circumstances.

The OCAC reported that due to the rapidly evolving geopolitical situation in the Middle East, international oil and shipping markets have become extremely volatile. Freight rates, insurance costs and availability of vessels have been severely impacted.

Marine insurers have either withdrawn or sharply increased war-risk coverage for ships operating in the Persian Gulf and the Strait of Hormuz due to the ongoing Iran-Israel-US conflict.

Freight rates for vessels operating in the Gulf region have reportedly increased almost fourfold, while war-risk insurance premiums for Gulf voyages have surged dramatically, making tanker chartering extremely difficult and expensive.

The prevailing market conditions have severely limited the willingness of shipowners, insurers and suppliers to undertake cargo movements in the region, the OCAC report said.

Under the current regulatory framework, importing refineries and oil marketing companies (OMCs) are required to import petroleum products on a C&F basis, under which the supplier arranges and pays for freight up to the destination port, while the buyer is responsible for arranging and bearing the cost of product insurance, including any war-risk coverage.

As per the SBP Foreign Exchange Manual (Chapter 13 — Imports), approval for CIF imports is normally granted on a case-by-case basis. However, given the exceptional circumstances and the potential risk to national fuel supply, the OCAC requested that a temporary general allowance be granted for petroleum cargoes, including crude oil, refined petroleum products, base oil and allied materials, for a period of up to two months.

Under CIF arrangements, the supplier is responsible for arranging freight as well as marine or product insurance, including war-risk coverage, as part of delivery of cargoes to the destination port.

Published in Dawn, March 12th, 2026