Pakistan secures Sept fuel, eyes US crude via VLCC as conflict threatens fuel supplies

Pakistan has secured fuel supplies for September and derisked October requirements even under adverse scenarios, but Federal Minister for Petroleum Ali Pervaiz Malik said the government is already planning for November as uncertainty over the duration of the regional conflict persists.

 “We have adequate stocks…even in this risky environment we have September covered. Even in the most adverse situation, we are okay for October also, but November I have to plan,” said Malik in an interview to local media.

The ongoing war, involving Iran and the United States, has caused significant oil disruptions, severely impacting Pakistan’s fragile economy.

The closure or disruption of the Strait of Hormuz, a critical chokepoint for nearly one-fifth of global oil and one-third of global LNG, has led to a surge in crude oil prices.

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Malik said that the government is running multiple contingency scenarios for disruptions to Hormuz, Bab el-Mandeb and Saudi supply routes.                     

The South Asian country is considering sourcing crude from Oman and Fujairah, while also exploring Libya, the US, Western Africa/Nigeria and Kazakhstan, he said.

“We are working on bringing in a VLCC [very large crude carrier] from the US and park it near Hub,” he said.

Explaining VLCCs, the minister shared that these vessels carry four times the crude offered by regular carriers.       

However, the existing Pakistani ports lack the draft and infrastructure to berth them, he said.

“So we will have to park it either in Sohar near Oman, or near Hub and do then do ship-to-ship transfers to ensure the crude supplies into Pakistan. If the chain snaps, then you have a severe diesel shortage in the country because you’re meeting all your diesel requirements by running the refineries on maximum throughput,” said Malik.

He said that due to Houthi attacks on oil facilities, Saudi supplies are currently out, adding that one Pakistani vessel is being kept on standby because of the disruption.

“Since Pakistan has a very limited number of vessels to manage its supplies. I have been talking to them that I cannot indefinitely hold this vessel in this parking position. So I will have to move it one way or the other,” he said.

Malik said that Pakistan has been very clear that if any of its vessels get hit, “it’s an act of war against the state”.

Pakistan is highly vulnerable as over 80-85% of its imported oil and gas originates from the Gulf region, all flowing through the Strait of Hormuz. The closure has led to drastically reduced supplies of LNG and LPG. Local refineries and oil marketing companies are seeking alternative routes, but at significantly higher prices.