KARACHI: The State Bank of Pakistan (SBP) on Wednesday temporarily allowed the import of petroleum products on a cost, insurance and freight (CIF) basis, aiming at ensuring an uninterrupted fuel supply amid volatile energy markets caused by escalating conflict in the Middle East.
“In view of the prevailing situation and critical importance of crude oil and petroleum products for the country, it has been decided to allow import of crude oil/ petroleum products on a CIF basis for a period of 60 days from the date of issuance of this circular letter,” the SBP said in a circular.
This action follows a request from the Oil Companies Advisory Council (OCAC) to the SBP, asking for a two-month regulatory relaxation to facilitate imports of crude oil, refined petroleum products, base oil, and related materials.
On Monday, in a letter to the SBP, the industry body said the global oil shipping market has turned highly volatile amid the ongoing confrontation between Iran and the US and Israel, which has heightened security risks in the Persian Gulf.
According to the OCAC, freight rates for vessels operating in the Gulf region have increased nearly fourfold, while insurers have either withdrawn or sharply raised war-risk coverage for ships passing through critical waterways such as the Strait of Hormuz.
The narrow maritime corridor, one of the world’s most important oil transit routes, connects the Persian Gulf to international markets. Rising conflict risks have made shipping companies and insurers increasingly cautious about operating in the area.
These developments have complicated Pakistan’s traditional fuel procurement arrangements, under which refineries and oil marketing companies import petroleum products on a CIF basis. Under this system, suppliers arrange and pay for freight up to the destination port, while Pakistani buyers must secure marine cargo insurance, including war-risk coverage, a task that has become increasingly difficult in the current market environment.
The OCAC had 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.
