Govt explores alternatives for oil imports if Strait of Hormuz closes

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Federal Minister for Petroleum Ali Pervez Malik has confirmed on Monday that if the Israeli-Israeli conflict causes the closure of the Hormuz Hormuz, the government is running alternative oil imports.

His statement came when Iran launched a move to stop the Strait of Straight in response to US attacks in nuclear places, which increased tensions in the Middle East.

Talking to Geo News, Malik said that the government is reviewing the situation of petroleum products daily during the developing regional situation.

Rejecting the fuel ration reports, he assured that the country has a proper reserve of petroleum products and made it clear that oil marketing companies have not been instructed to reduce sales.

Malik said, “Today, we have estimated the potential challenges that can arise if the Strait of Hormuz has been closed,” said Malik, the country said and expressed hope for improvement in the regional situation.

He revealed that authorities were working on emergency plans to import oil in case of the closure. The country added that the government will do its best to maintain the supply chain of petroleum products.

The Strait is located between Oman and Iran, and its Gulf connects the Gulf to the South and beyond the Gulf of Oman in the north.

About a fifth of the world’s total oil consumption passes through the Strait. Analytics firm Vertexa data shows that between 2022 and the beginning of the previous month, anywhere from 17.8 million to 20.8 million barrels of raw, condensation and fuel, the analytics firm shows the data from Vortexa.

Referring to the potential challenges, the Federal Minister said that Prime Minister Shahbaz Sharif will also review the situation in the next meeting.

The country said that fuel prices have not been raised happily and the government will have to increase them in view of the rise in oil rates globally.

He added that Balochistan has been directed to ensure fuel supply.

Petrol, diesel reserves

Meanwhile, Imran Ghaznavi, a spokesman for the Oil and Gas Regulatory Authority (OGRA), told Geo News that petrol reserves are sufficient in the country for about 222 days.

Given the status of fuel reserves, he added that there is enough diesel to meet consumption for 32 days in the country.

He also confirmed that fuel imports were underway as per the schedule. Ghaznavi made it clear that the concerned authorities did not issue any instructions to prevent or restrict the fuel supply.

“The country’s daily gasoline consumption is about 24,000 metric tons, and diesel consumption is about 18,000 metric tons,” he said.

About 84 84 % of the oil passes through the Strait Harmos are intended for Asia, which left China, India, South Korea and others economies, if Iran should block the major trade route on US attacks in its nuclear locations.

Crude oil from Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Qatar and Iran almost passes through the passage.

Restriction

Asian countries can make their oil suppliers diverse, but it is difficult to change the large amount of the Middle East.

In the short term, “Elevated Global Oil Inventions, OPEC+available spare capacity, and US shell production can provide buffers,” said experts at MUFG Bank.

“However, the complete closure of the Harmos Strait will still affect the access to a large part of this lapse production capacity concentrated in the Persian Gulf,” he said.

Saudi Arabia and the United Arab Emirates have infrastructure to ignore the Strait, which potentially reduces obstacles, but their transit potential is very limited – about 2.6 million barrels a day.

According to the EIA, the Gaura Pipeline was built to export the via Gulf of Oman, which has been inactive since last year, its maximum capacity is only 300,000 barrels, according to the EIA.

– with additional input from AFP, Reuters