Pakistan sets up crisis committee to oversee fuel prices, supply as Middle East tensions rise

Prime Minister Shehbaz Sharif has constituted a high-level committee to monitor petroleum product prices and supply dynamics amid regional tension.

“In response to the evolving geopolitical situation following Israel’s recent attack on Iran and the resulting volatility in the international oil markets, the Prime Minister of Pakistan has constituted a high-level committee to monitor petroleum product pricing and supply dynamics,” read a statement released by the Ministry of Finance on Monday.

The committee is chaired by Finance Minister, Muhammad Aurangzeb, and includes senior representatives from key federal ministries, regulatory authorities, and energy sector experts.

“The formation of this committee reflects the government’s proactive approach to safeguarding national energy interests and ensuring market stability during a time of heightened international uncertainty,” it added.

The committee has been entrusted with the task of closely monitoring the forward/ futures prices of petroleum products and the predictability of the supply chain given the current conflict in the region.

The committee is also entrusted to determine the forex implications of price volatility for the short and medium term, and suggest a plan, if required, to ensure that there are no supply disruptions and the market is well supplied.

Moreover, the committee is also responsible for carrying out a detailed analysis of the fiscal impact in the event of a protracted conflict.

Internationally, oil prices were volatile on Monday, after surging 7% on Friday, as renewed strikes by Israel and Iran over the weekend increased concerns that the battle could widen across the region and significantly disrupt oil exports from the Middle East.

Brent crude futures rose 64 cents, or 0.86%, to $74.87 a barrel by 0507 GMT, while US West Texas Intermediate crude futures gained 76 cents or 1.04%, to $73.74.

Iranian missiles struck Israel’s Tel Aviv and the port city of Haifa on Monday, destroying homes and fuelling concerns among world leaders at this week’s G7 meeting that the battle between the two old enemies could lead to a broader regional conflict.

An exchange of strikes between Israel and Iran on Sunday resulted in civilian casualties, with both militaries urging civilians on the opposing side to take precautions against further strikes.

The latest developments have stoked concerns about disruptions to the Strait of Hormuz, a vital shipping passage. About a fifth of the world’s total oil consumption, or some 18 to 19 million barrels per day (bpd) of oil, condensate and fuel, passes through the strait.

Meanwhile, during the committee’s inaugural meeting held on Monday, the members conducted a detailed assessment of the global and domestic petroleum market situation.

“The committee expressed satisfaction that Pakistan currently holds adequate stocks of petroleum products and there is no immediate risk of supply disruption.

“Nonetheless, members emphasised the need for continued vigilance given the rapidly changing regional context,” read the statement Moreover, to ensure a timely response and effective coordination, a working group will monitor developments daily, and the full committee will meet weekly to review the situation and submit recommendations to the prime minister.

The Petroleum Division has been designated to provide secretarial support and ensure effective implementation of the committee’s mandate.

The government remains fully committed to “maintaining energy security, stabilising markets, and protecting the national interest during this critical time”.