With the Strait of Hormuz effectively shut down following the Iran US Israel war, Pakistan has moved quickly to figure out how to keep oil flowing into the country. The government is now planning to bring oil in through the Red Sea, sourcing supplies from Saudi Arabia and the UAE through ADNOC and Saudi Aramco, bypassing the blocked strait entirely. It is not a perfect solution but it is the most practical one available right now and the government appears to have already set things in motion. A couple of oil vessels have already reached Pakistan through this route and others are currently on their way.
Pakistan imports around one million barrels of oil every month and Saudi Arabia is one of the biggest suppliers, so the closure of the Strait of Hormuz hits directly where it hurts. Two crude oil cargoes are currently stranded because of the closure, which is not ideal, but sources told The Express Tribune that the country currently holds enough petrol and diesel stocks to meet 28 days of requirements. That buffer was not an accident either. Officials said OGRA had actually forecast back in January that tensions in the Middle East could escalate into a full scale war, so they started building up stocks early. By January they had ensured over 25 days of supply and by February that had been pushed to 28 days. That kind of forward planning is exactly what has kept Pakistan from facing an immediate crisis despite everything happening in the Gulf right now.
On top of the Red Sea supply route, the government is also planning to shift the oil price review from a fortnightly system to a weekly one. The reason for that is pretty straightforward. When there is uncertainty around oil prices and the possibility of a big jump coming, dealers tend to start hoarding petroleum products to sell later at higher prices. Moving to weekly reviews makes that a lot less attractive because the price gets adjusted more frequently and the window for profitable hoarding becomes much smaller. Sources also said the government has projected a possible increase of around Rs50 per litre in oil prices as a result of the war, so that weekly review mechanism is going to matter a lot for ordinary consumers in the weeks ahead.
Pakistan National Shipping Corporation vessels have been placed on standby to lift supplies from Saudi Arabia and the UAE, and the Petroleum Division had already directed OGRA to closely monitor imports and ensure timely delivery given the security situation in the Gulf. India has reportedly been doing something similar, taking Russian oil in bulk through the Red Sea to secure its own fuel supplies after the US put pressure on it to stop Russian imports. Pakistan is essentially playing the same game, just with different suppliers.
The bigger picture here is genuinely concerning though. The Strait of Hormuz is only 21 miles wide but over 20 million barrels of crude oil, condensate and fuel passed through it every single day last year. OPEC members including Saudi Arabia, Iran, the UAE, Kuwait and Iraq all use it to export the bulk of their crude to Asia. If the war continues for even another week, experts are warning that the entire world could be looking at a serious oil crisis. Pakistan has bought itself some time with smart stock management and the Red Sea alternative, but nobody is pretending this is a long term solution. Everything depends on how quickly the conflict either escalates or gets resolved.
