By SKM
March 9, 2026
ISLAMABAD: Pakistan’s fuel import system has come under fresh strain after a recent tender floated by Pakistan State Oil (PSO) for key petroleum cargoes attracted no bids, reflecting growing disruption in Gulf shipping amid rising geopolitical tensions in the Middle East.
Against this backdrop, the oil industry has urged the State Bank of Pakistan (SBP) to temporarily allow petroleum imports on a Cost, Insurance and Freight (CIF) basis to help ensure uninterrupted fuel supplies.
In a letter sent to SBP Governor Jameel Ahmad on March 9, the Oil Companies Advisory Council (OCAC), which represents major oil marketing companies and refineries, sought a two-month regulatory relaxation to facilitate imports of crude oil, refined petroleum products, base oil and allied materials.
The industry body said the global oil shipping market has become highly volatile amid the escalating confrontation involving Iran, Israel and the United States, which has heightened security risks across the Persian Gulf.
According to OCAC, freight rates for tankers operating in the Gulf have surged nearly fourfold, while marine insurers have either withdrawn or sharply increased war-risk coverage for vessels sailing through strategic waterways such as the Strait of Hormuz.
The narrow maritime passage — one of the world’s most critical oil transit routes — connects the Persian Gulf with global markets. Heightened security risks have made shipowners, insurers and traders increasingly cautious about operating in the region.
These developments have complicated Pakistan’s conventional fuel procurement framework, under which refineries and oil marketing companies import petroleum cargoes on a Cost and Freight (C&F) basis.
Under this arrangement, suppliers arrange shipping while Pakistani buyers must secure marine insurance, including war-risk cover — a requirement that has become increasingly difficult under current market conditions.
The problem surfaced when PSO’s recent spot tender for gasoline (MS), high-speed diesel (HSD) and jet fuel (JP-1) reportedly failed to attract any bids.
The tender was floated through the Gallop trading platform on a C&F basis, highlighting the reluctance of international suppliers to participate under prevailing shipping and insurance risks.
Industry officials say the failed tender has underscored the need for temporary regulatory flexibility to avoid disruptions in fuel procurement.
OCAC has therefore proposed allowing imports on a CIF basis, under which suppliers would arrange both freight and marine insurance — including war-risk coverage — as part of the cargo delivery to the destination port.
Industry representatives argue that international suppliers are better positioned to secure insurance coverage and manage shipping risks during periods of heightened geopolitical uncertainty.
The council also pointed out that under Chapter 13 of the SBP Foreign Exchange Manual, CIF imports require approval on a case-by-case basis. However, it has requested a temporary blanket permission for petroleum cargoes to prevent delays in procurement.
The request comes at a sensitive time for Pakistan’s energy supply chain, particularly ahead of the upcoming agricultural season, when diesel consumption typically increases.
OCAC warned that continued difficulties in arranging tanker shipments and insurance cover could disrupt cargo bookings and affect domestic fuel availability if the situation persists. Ends
