Federal oil minister Ali Pervaiz Malik said on Monday that arrangements were made to import oil products through alternative routes in the event of a close closing Hormuz in the midst of Iran-Israel.
His statement came after Iran’s moves began to prevent the strait in response to US strikes in nuclear sites that increased tensions in the Middle East.
Speaking to Geo News, Malik said the government reviewed the condition of oil products daily in the midst of an evolving regional situation.
Rejecting reports on fuel distribution, he assured that the country had sufficient oil reserves and clarified that oil marketing companies were not called upon to reduce sales.
“Today, we have evaluated the possible challenges that could arise if the Hormuz Strait is closed,” Malik said, expressing optimism about improving the regional situation.
He revealed that the authorities were working in emergency plans for oil imports in the event of a close closing. The government will make all efforts to maintain the supply chain of oil products, Malik added.
The strait is located between Oman and Iran and connects the Gulf north with the Gulf of Oman to the south and the Arabic Sea.
About one fifth of the total oil consumption in the world passes through the strait. Between the early 2022 and last month, somewhere between 17.8 million and 20.8 million barrels of raw, concentrate and fuel fell through the daily close, showed data from the Vortexa Analysis Company.
Referring to possible challenges, the federal minister said Prime Minister Shehbaz Sharif will also review the situation in an upcoming session.
Malik said fuel prices have not grown willingly and the government should increase them given the increase in global oil rates.
He added that instructions have been issued to ensure fuel supply to Balochistan.
Gasoline, diesel reserves
Meanwhile, a spokesman for the oil and gas regulatory authority (OGRA) Imran Ghaznavi told Geo News that the country has gasoline reserves sufficient for about 22 days.
Operating the condition of fuel stocks, he added that the country has enough diesel to cover consumption for 32 days.
He also confirmed that fuel imports continue according to the timetable. Ghaznavi clarified that the competent authorities did not issue any directives to stop or limit fuel.
The daily consumption of gasoline is about 24,000 metric tonnes and diesel consumption is about 18,000 metric tonnes, “he concluded.
About 84% of the oil passing through the Strait of Hormuz is intended for Asia, leaving the economies of China, India, South Korea and other vulnerable if Iran excludes the critical trade route over US strikes in its nuclear regions.
Slow oil from Saudi Arabia, UAE, Iraq, Kuwait, Qatar and Iran pass almost exclusively through the corridor.
Limited alternatives
Asian countries could differentiate their oil suppliers, but it is difficult to replace the large volumes from the Middle East.
In the short term, “increased worldwide oil reserves, available OPEC+reserve capacity and US slate production could provide some buffers,” said MUFG Bank experts.
“However, the complete closure of the narrow Hormuz would still affect the accessibility of an important part of this spare production capacity concentrated in the Persian Gulf,” they said.
Saudi Arabia and the UAE have the infrastructure to bypass the strait, possibly mitigating the disorders, but their transit capacity remains very limited – about 2.6 million barrels a day.
The Goreh-Jask pipeline built by Iran to export through the Oman Gulf, which is inactive since last year, has a maximum capacity of only 300,000 barrels a day, according to the EIA.
– with additional entry from AFP, Reuters
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