ISLAMABAD: Pakistan has moved to initiate the development of Strategic Petroleum Reserves (SPR) aimed at building a fuel buffer of up to 90 days, as policymakers respond to heightened concerns over potential supply disruptions linked to instability in the Strait of Hormuz, a critical global oil transit route.
The development comes amid renewed geopolitical tensions following military escalation involving the US and Israel against Iran, which has raised fears of volatility in global energy markets. Pakistani authorities view the situation as a reminder of the country’s heavy reliance on imported petroleum and its exposure to external shocks.
Under the emerging plan, the government may consider the option to impose Petroleum Development Levy (PDL) on petrol and diesel. Officials estimate that with annual consumption of approximately 20 billion litres, the PDL of Rs10 per litre on petrol and diesel could generate around Rs200 billion per year. Over a three-year period, this mechanism could mobilize nearly Rs600 billion, equivalent to over $2 billion, which would be earmarked for the construction of strategic storage facilities. This project can be materialized in three years.
At present, Pakistan maintains only 24 to 28 days of fuel cover, held primarily as commercial inventories managed by oil marketing companies. These stocks are designed to support routine supply operations rather than withstanding major disruptions. In contrast, international benchmarks are significantly higher, with member states of the International Energy Agency (IEA) maintaining strategic reserves equivalent to 90 days of consumption, India holding around 75 days, and China maintaining reserves of up to 120 days.
To address this gap, the government has constituted a high-level committee under the Petroleum Division to finalize recommendations for the establishment of SPR infrastructure. The committee, formed on April 22, 2026, by Petroleum Minister Ali Pervaiz Malik, is tasked with submitting its recommendations by May 8 for consideration by top decision-making authorities. The committee comprises senior representatives from key institutions including the Oil and Gas Regulatory Authority (Ogra), the National Crisis Management Cell, Joint Staff Headquarters, Pakistan State Oil, Inter State Gas Systems, and Pakistan Institute of Development Economics. Representatives from the private sector, including Hubco and other refinery and storage stakeholders, have also been included to provide input on implementation models.
Officials familiar with the discussions note that Pakistan’s vulnerability to energy disruptions is heightened by its dependence on imported crude oil and refined petroleum products. The proposed SPR is being framed as a national security measure intended not only to stabilize domestic fuel supplies during crises but also to provide a buffer in scenarios involving geopolitical conflict, maritime blockades, or global price spikes.
Policy discussions have also highlighted the possibility of adopting international models, including third-country storage arrangements where strategic reserves are held in friendly oil-producing nations. Such mechanisms are already used by countries such as Japan, India, South Korea, and China to reduce domestic storage costs while maintaining access to emergency supplies.
In addition to SPR development, authorities are also considering expanding existing commercial storage capacity from the current 24–28 days to 45–50 days to strengthen routine supply resilience. Experts involved in the process emphasize that strategic reserves differ from commercial inventories as they are state-controlled and specifically designated for emergency use, particularly during war-like situations or severe global supply disruptions.
The committee is currently reviewing multiple studies, including earlier work by international consultants and recent assessments by local think tank, as part of efforts to design a feasible and cost-effective framework. However, officials acknowledge that past recommendations on strategic storage were not fully implemented, contributing to the present gap in preparedness.
As deliberations continue, policymakers describe the SPR initiative as a critical step towards strengthening Pakistan’s long-term energy security. The final recommendations are expected to shape whether the country can move from short-term fuel management to a more resilient, strategically secured energy system capable of withstanding future global shocks.
