The Oil Companies Advisory Council has formally approached the State Bank of Pakistan to request an emergency shift in import regulations as the escalating Middle East conflict wreaks havoc on international shipping and insurance markets. In a letter addressed to the Governor of the SBP, the OCAC highlighted that the rapidly deteriorating geopolitical situation has made the international oil and shipping sectors extremely volatile. Freight rates for vessels operating within the Persian Gulf have reportedly quadrupled, while marine insurers are either withdrawing coverage entirely or drastically increasing premiums for war-risk insurance. This has created a situation where chartering tankers for Gulf voyages is becoming nearly impossible for local players, posing a direct threat to the national fuel supply.
Currently, the regulatory framework in Pakistan mandates that refineries and Oil Marketing Companies conduct imports on a Cost and Freight basis. Under these terms, the buyer is responsible for arranging and paying for product insurance, including specialized war-risk coverage. However, with the Strait of Hormuz and Persian Gulf now designated as high-risk zones, Pakistani companies are finding it nearly impossible to secure adequate marine insurance from the open market. This logistical bottleneck was recently exposed when a spot tender by Pakistan State Oil received no bids for critical fuels like motor spirit and high-speed diesel, simply because suppliers were unwilling to participate under existing C&F terms where the buyer handles the insurance risk.
To bypass this hurdle, the OCAC has proposed that the central bank allow a temporary general allowance for imports on a Cost, Insurance, and Freight basis for a period of two months. Under a CIF arrangement, the global supplier takes responsibility for arranging both the freight and the necessary marine and war-risk insurance. This would allow international suppliers, who often have broader access to global insurance pools, to secure the necessary coverage and facilitate the movement of crude oil, refined products, and base oils to Pakistani ports. The council argues that this case-by-case approval process typically required by the SBP Manual is too slow for the current emergency and that a blanket temporary approval is necessary to protect the upcoming agricultural season and overall national energy security.
Beyond the challenges at the ports, the domestic retail network is also under immense strain. In a separate communication to the Oil and Gas Regulatory Authority, the OCAC reported a sudden and unusual spike in fuel demand at retail outlets across the country. This surge is being driven primarily by panic buying as citizens react to the uncertainties of the regional war. In many locations, sales volumes have effectively doubled overnight, leading to temporary stock depletions as tankers struggle to keep pace with the abnormal offtake. While OMCs are working to increase dispatches and replenish these stations, the sheer speed of consumption has left some pumps dry for short intervals.
A major concern for the industry is the heavy-handed response from local district administrations. The OCAC has pointed out that in several districts, authorities have begun sealing petrol pumps that have temporarily run out of fuel. While the intent is to prevent hoarding or malpractice, the council warns that sealing stations facing genuine stockouts is counterproductive. These actions prevent the resumption of sales once the tankers actually arrive, create further operational headaches for the OMCs, and serve only to intensify public anxiety. The OCAC has requested that OGRA intervene and advise provincial and local governments to refrain from sealing outlets where replenishment is already in progress.
Ensuring the smooth functioning of the retail supply network is critical to avoiding a total breakdown in public order and economic activity. The oil industry has reiterated its commitment to maintaining the fuel supply, but it requires regulatory flexibility to navigate the external shocks currently hitting the maritime trade routes. By allowing CIF imports on an interim basis, the government can shift the burden of securing expensive and rare war-risk insurance to international suppliers, ensuring that the country’s energy stocks do not reach dangerously low levels. As the regional situation continues to evolve, the ability of the SBP and OGRA to provide timely and practical guidance will be the deciding factor in whether Pakistan can avoid a full-scale energy crisis.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem