Govt drops 'petrol bomb' as petrol, diesel prices raised by Rs55/litre

ISLAMABAD: The federal government on Friday night announced a steep increase of Rs55 per litre in the prices of petrol and high-speed diesel amid escalating tensions in the Middle East that have severely disrupted global energy supply lines.

The decision came as the regional situation deteriorated following air strikes by the United States and Israel last week that killed Ayatollah Ali Khamenei, the Supreme Leader of Iran, along with several senior Iranian officials. The strikes triggered retaliatory military action by Tehran, expanding the conflict across the region.

In response, Iran launched attacks on American military bases in several Gulf states and announced the closure of the strategic Strait of Hormuz, effectively halting the movement of oil supplies through one of the world’s most critical energy corridors. The disruption pushed global crude prices toward their sharpest weekly rise since the extreme volatility witnessed during the COVID-19 pandemic in 2020.

Amid the unfolding crisis, Pakistan—which relies heavily on imported energy—has come under significant economic pressure. The government has begun reassessing its energy strategy as the regional conflict shows no immediate signs of easing.

Addressing a press conference in Islamabad, Ishaq Dar, Muhammad Aurangzeb, and Ali Pervaiz Malik outlined the government’s response to the rapidly evolving situation.

Petroleum Minister Ali Pervaiz Malik formally announced the fuel price increase, stating that the rates would now be reviewed on a weekly basis given the volatility in global oil markets.

Praising Shehbaz Sharif for guiding the energy sector during the crisis, Malik said the region was facing extraordinary circumstances as a conflict that began in a neighbouring country had now engulfed much of the Middle East.

“The fundamental issue we face is that we do not know how long this crisis will persist,” Malik said. He added that the government had taken steps to build petroleum reserves to relatively comfortable levels, which had helped prevent an immediate energy emergency.

However, the minister cautioned that with no clear timeline for the conflict’s end, the country would have to manage its reserves carefully and adopt proactive measures to maintain supply.

Deputy Prime Minister and Foreign Minister Ishaq Dar said the government had remained in constant contact with relevant ministries and energy stakeholders to minimise the burden on the public.

He noted that Pakistan had been actively engaging with regional partners and countries across the Middle East and Central Asia to push for diplomatic efforts aimed at reducing tensions.

“Pakistan is making every effort, in coordination with its partners, to de-escalate the conflict that has virtually become a war situation,” Dar said, adding that the duration of the crisis remained uncertain.

Finance Minister Muhammad Aurangzeb said Pakistan’s macroeconomic indicators remained relatively stable despite the emerging crisis. He noted that the country’s foreign exchange reserves provided a degree of economic stability.

At the same time, Aurangzeb warned against complacency.

“Hope is not a strategy,” he said, emphasising the need for coordinated planning across the government to deal with possible scenarios arising from the regional conflict.

Meanwhile, Muzammil Aslam, adviser to the chief minister of Khyber Pakhtunkhwa on finance, described the current circumstances as requiring “extraordinary measures for extraordinary situations”.

He urged the federal government to ensure that the full impact of rising fuel prices was not transferred directly to consumers, noting that household budgets were already under severe pressure.

Aslam also criticised the handling of the petrol situation, pointing to long queues at fuel stations during Iftar hours in recent days. According to him, the rush was largely driven by rumours and speculation about impending price increases rather than an actual shortage of fuel.

Earlier, the government directed provincial authorities to take strict action against hoarding of petroleum products and ensure uninterrupted supply across the country. Officials told a high-level meeting that Pakistan currently had sufficient fuel stocks to meet domestic demand despite the evolving regional situation.

The crisis has also affected Pakistan’s gas supply arrangements. On Thursday, Petroleum Minister Ali Pervaiz Malik revealed that QatarEnergy had issued a force majeure notice due to the war-related disruptions, forcing Pakistan to explore alternative supply arrangements.

He warned that the closure of the Strait of Hormuz had created a critical choke point in the global energy supply chain, significantly affecting shipments.

Malik said preliminary assessments suggested the crisis could continue for “weeks, not days”, meaning Pakistan would have to stretch its existing reserves as much as possible.

Given the uncertainty, the government is considering demand-management measures similar to those adopted during the COVID-19 pandemic, including encouraging remote work, reducing physical meetings and discouraging unnecessary intercity travel to conserve fuel and energy resources.