Pakistan’s oil industry has asked the State Bank of Pakistan to temporarily allow petroleum imports on a cost, insurance and freight basis as geopolitical tensions in the Middle East disrupt shipping and insurance markets.
In a letter to the central bank, the Oil Companies Advisory Council said the ongoing Iran-Israel-United States conflict has created severe volatility in global oil shipping markets, sharply raising freight rates, insurance costs, and limiting the availability of vessels.
The industry group noted that marine insurers have either withdrawn or significantly increased war risk coverage for ships operating in the Persian Gulf and the Strait of Hormuz. Freight rates have reportedly increased nearly four times, while war risk insurance premiums have surged, making tanker chartering extremely difficult.
Under existing regulations, refineries and oil marketing companies must import petroleum products on a cost and freight basis, where the supplier arranges shipping while the buyer must secure marine and war risk insurance. However, companies say obtaining such insurance has become extremely difficult under current conditions.
The problem was highlighted when a recent spot tender issued by Pakistan State Oil for petrol, high speed diesel and JP 1 fuel cargoes on a C&F basis received no bids from suppliers.
The OCAC has therefore requested the central bank to grant a temporary two month allowance for imports on a CIF basis, under which suppliers would arrange both freight and insurance, including war risk coverage, as part of delivering cargo to Pakistan.
The council said such an arrangement would help ensure uninterrupted fuel supplies, particularly ahead of the upcoming crop sowing season, and enable oil companies to secure shipments more easily in the current volatile market.
In a separate communication, the OCAC also asked the Oil and Gas Regulatory Authority to intervene after local administrations began sealing petrol stations that temporarily ran out of fuel during a recent surge in demand.
The council said panic buying triggered by regional uncertainty had pushed fuel sales to nearly double normal levels in some areas, temporarily depleting stocks at certain retail outlets while new tanker deliveries were still in transit.
OCAC warned that sealing fuel stations facing temporary shortages could further disrupt the supply chain and increase public anxiety, urging authorities to allow outlets to resume operations once fresh supplies arrive.
