EXPLAINER: Renewed Iran-US conflict: What does it mean for Pakistan’s petrol supply?

The renewed conflict between Iran and the United States has brought Pakistan’s fuel situation back under pressure, only weeks after a temporary ceasefire had provided some relief.

For Pakistani consumers, the first effect is already visible in prices. Petrol rose by Rs6.39 to Rs327.12 per litre on July 23, while high-speed diesel increased by Rs7.83 to Rs375.04 per litre. The latest adjustment followed increases announced a day earlier, as international oil prices rose sharply.

This does not mean Pakistan is about to run out of fuel. The country still has petrol and diesel in storage, local refineries continue producing petroleum products, and additional cargoes are expected to arrive.

The situation is nevertheless becoming more difficult. Pakistan imports large quantities of crude oil and refined products, depends heavily on Gulf shipping routes and holds only a limited number of days of fuel cover. A prolonged disruption could therefore turn an international price shock into a domestic supply problem.

What has happened since the ceasefire?

An interim arrangement between Iran and the United States had allowed some shipping to resume through the Strait of Hormuz and created space for further negotiations. The strait normally handles around one-fifth of global oil and liquefied natural gas trade.

That arrangement has since unravelled.

The United States resumed strikes on Iranian targets after attacks on commercial vessels, while Iran launched retaliatory attacks and again sought to restrict tanker movements through Hormuz. Vessel traffic through the strait subsequently fell to its lowest level in months, with no very large crude carriers or LNG tankers recorded passing through on some days.

The disruption has also spread towards the Red Sea.

Houthi forces attacked Saudi oil tankers and threatened shipping through the Bab el-Mandeb Strait. Saudi Arabia had been using its East-West pipeline and Red Sea terminals to bypass disruption at Hormuz. Pressure on the Red Sea route therefore reduces the usefulness of one of the Gulf’s main alternatives.

Brent crude moved above $100 per barrel on July 23 after the tanker attacks, compared with around $84 a week earlier.

Does Pakistan have enough petrol right now?

The latest reported stock position suggests Pakistan has enough fuel to meet immediate requirements.

Reported petrol inventories stood at approximately 416,000 tonnes on July 21. At daily consumption of around 25,000 tonnes, this represented roughly 17 days of supply.

High-speed diesel inventories were reported at approximately 463,000 tonnes, equivalent to around 20 days of demand at the prevailing consumption rate.

These figures should not be treated as a countdown to the day Pakistan runs out of fuel.

Petrol and diesel continue entering the system through local refinery production and imports. If scheduled vessels arrive, the number of days of cover can increase. If cargoes are delayed or daily consumption rises, the buffer can fall.

The figures instead show how much room Pakistan has to manage disruption. Seventeen days of petrol cover provides time to arrange new supplies, but not enough to withstand a lengthy interruption without reducing consumption or finding alternative cargoes.

The government expects vessels carrying around 204,000 tonnes of petroleum products to arrive within ten days, while ships carrying another 42,000 tonnes had already berthed by July 21. Refineries have also been asked to increase petrol and diesel production and procure additional crude cargoes.

The immediate question is therefore whether incoming supplies arrive quickly enough to replace what the country consumes each day.

Could petrol pumps still run dry?

Yes, but a dry petrol pump does not necessarily mean Pakistan is experiencing a nationwide shortage.

National stocks are divided among different refineries, terminals, oil marketing companies and regions. A company may hold insufficient supplies in one city even when other companies have fuel available elsewhere.

A local shortage can occur because a vessel is delayed, fuel is awaiting customs clearance, a pipeline is congested, road tankers cannot reach a depot or an oil marketing company has failed to maintain the required stocks.

This means some stations may temporarily stop selling petrol while national inventories remain adequate.

A nationwide shortage would be more serious. It would involve supply problems across several oil marketing companies and large parts of the country, accompanied by falling national inventories and insufficient incoming cargoes.

The Oil and Gas Regulatory Authority has been inspecting filling stations and examining whether oil marketing companies are maintaining mandatory stocks. Notices were issued to eight companies amid an investigation into alleged manipulation involving around 300,000 tonnes of fuel.

Why is Pakistan so vulnerable?

Pakistan imports substantial quantities of both crude oil and finished petroleum products.

According to the Pakistan Economic Survey 2025-26, petroleum imports reached 13.64 million tonnes during the first nine months of the financial year, up from 13.17 million tonnes during the corresponding period a year earlier.

Imported crude is processed by domestic refineries into petrol, diesel and other products. Pakistan also directly imports finished petrol and diesel when refinery production is insufficient to meet demand.

A disruption in the Gulf can therefore affect both sides of the supply chain. Refineries may find it harder to obtain crude oil, while oil marketing companies may face delays and higher costs when purchasing finished products.

The Strait of Hormuz does not have to close completely for Pakistan to suffer.

Shipping companies may avoid the area because of missile, drone or mine risks. Tankers can remain anchored while awaiting security clearance. Insurers can impose war-risk premiums, while suppliers can charge more for cargoes available at short notice.

If ships avoid both Hormuz and the Red Sea, they may have to take longer routes around Africa. Some journeys could take several additional weeks, increasing freight charges and delaying deliveries to Asian buyers.

Pakistan could therefore continue receiving fuel but pay much more for it.

Does the conflict mean higher petrol prices or an actual shortage?

Higher prices are the more immediate and likely consequence.

Pakistan has authorised Ogra to determine petroleum prices daily in line with international market movements. The mechanism allows changes in global fuel prices, shipping costs and import premiums to appear in domestic prices more quickly than under the previous weekly or fortnightly system.

If international oil prices remain elevated, petrol and diesel prices in Pakistan can continue rising even when supplies remain available.

An actual shortage would require an additional problem: Pakistan would need to receive fuel more slowly than it consumes existing stocks.

The country can therefore face three different situations.

The first is a price shock, in which petrol remains available but becomes significantly more expensive.

The second is a distribution disruption, in which some stations or regions face temporary shortages despite adequate national stocks.

The third is a national supply crisis, in which overall imports and refinery production are no longer sufficient to meet essential demand.

Pakistan is currently dealing mainly with the first situation, alongside a risk of localised disruption. It has not yet reached the third.

Why does diesel matter as much as petrol?

Petrol is used mainly by motorcycles, cars, rickshaws and other light vehicles. An increase affects household travel and commuting costs directly.

Diesel has a broader effect on the economy.

Trucks carrying vegetables, grain, milk, industrial material and consumer goods run largely on diesel. It is also used by buses, agricultural machinery, construction equipment and generators.

A sustained diesel increase therefore raises transport and production costs across several sectors. Businesses may pass those costs to consumers through higher food prices, fares, delivery charges and retail prices.

This means the effects of the conflict can reach households that do not own a car or motorcycle.

Why were schools closed during the earlier fuel crisis?

Pakistan’s response to the first phase of the crisis developed in stages.

On March 9, the government announced a fuel-conservation and austerity programme. Schools were to close for two weeks, universities were told to move classes online, and government offices shifted to a four-day working week.

Only half of public-sector employees were required to work from offices, government fuel allowances were reduced by 50%, and 60% of official vehicles — excluding essential vehicles such as buses and ambulances — were taken off the road.

At that stage, authorities said petroleum stocks were at comfortable levels and additional shipments were expected. The purpose of the measures was to reduce travel, slow fuel consumption and preserve supplies in case the external disruption continued.

The position became more serious within days.

On March 13, the government declared a three-day public holiday to reduce movement amid a nationwide petrol and diesel shortage. Schools and other educational institutions were ordered to remain closed until March 31.

The measures were sometimes described as a lockdown, but they were not a complete nationwide lockdown of the kind imposed during the coronavirus pandemic. They consisted of school closures, public holidays, remote working, reduced official transport and restrictions on commercial activity.

What happened to shops, malls and restaurants?

Business timings were restricted as part of the wider energy-conservation programme.

The federal government later directed markets to close by 8pm. In Punjab, shops, markets and shopping malls were required to close at 8pm, while hotels, restaurants and food outlets could remain open until 10pm.

Timings were adjusted as the situation improved and worsened. In Islamabad, an 8pm closing time for shops, markets and malls was restored in June following renewed pressure on fuel supplies.

Closing businesses earlier reduces evening travel and lowers electricity demand. It can also reduce the use of diesel generators by commercial establishments during periods of power shortages.

The restrictions were therefore not aimed solely at saving petrol used by shoppers. They formed part of a wider attempt to reduce transport, electricity and fuel consumption.

Could schools and businesses face restrictions again?

Not automatically.

A rise in petrol prices alone would not necessarily lead to school closures or additional restrictions. The government would first be expected to arrange more imports, increase refinery production, release available stocks and control hoarding.

Restrictions become more likely if imports remain disrupted for several weeks and inventories continue falling despite those measures.

The earlier response provides a possible sequence.

The government could initially reduce official travel, cut fuel allowances and increase remote work. It could then enforce earlier closing times for markets and malls. Universities could move online, followed by temporary school closures if a larger reduction in daily commuting was required.

Formal limits on fuel purchases or rationing would be a later and more serious step. There is currently no indication that nationwide rationing is being imposed.

What could happen next?

If the conflict remains limited and cargoes continue arriving, Pakistan is likely to face volatile and generally higher petrol and diesel prices. Some stations may experience temporary interruptions, but a nationwide shortage would remain unlikely.

If disruption continues for several weeks, oil marketing companies will have to replace fuel at increasingly high prices while managing shipping delays. Pakistan’s stock cover could fall, and the government may revive work-from-home arrangements, official fuel cuts and restricted commercial timings.

The most serious scenario would involve prolonged disruption at both the Strait of Hormuz and the Bab el-Mandeb Strait. Pakistan would then compete with larger Asian importers for a smaller number of available cargoes and tankers. Longer journeys, higher insurance costs and delayed deliveries could begin reducing physical availability.

Under that scenario, school closures, reduced office attendance, limits on commercial activity and fuel rationing could return.

Pakistan has not reached that point. The present situation is best understood as a renewed price and supply risk rather than an existing nationwide petrol shortage.

The key indicators will be the arrival of scheduled cargoes, the number of days of national stock cover, local refinery output and whether shortages begin appearing across several companies and regions at the same time.