Pakistan mandates prior approval for fuel oil exports amid Middle East war

Pakistan has instructed oil refineries to obtain government approval before exporting furnace oil, as it seeks to bolster reserves amid the US-Israel conflict with Iran that has disrupted Middle East oil flows.

"The Prime Minister Committee on the Monitoring of Petroleum Prices has decided that in view of the emerging regional situation arising from the US-Iran conflict, export of furnace oil shall be undertaken, only after obtaining prior approval from the aforesaid PM Committee," Iftikhar Mehmood, executive director, Oil and Gas Regulatory Authority (OGRA) said in a statement dated March 11.

The official document from the state entity OGRA was sent to notify all refineries in the country -- Pak-Arab Refinery Ltd. (PARCO), Attock Refinery Ltd., National Refinery Ltd., Pakistan Refinery Ltd., and Cnergyico Ltd.

Pakistan typically uses furnace oil in domestic utilities, but government policies favor cheaper alternatives for power generation. This has led to mounting stockpiles and prompted refiners to rely on exports, shifting Pakistan from a net importer to a regular exporter of fuel oil in recent years, according to market sources.

Pakistan has exported 846,006 metric tons of fuel oil and 160,500 mt of light sulfur fuel oil in the seven months ended Jan. 31, 2026, in the current fiscal year that began in July 2025, according to the latest data from Oil Companies Advisory Council (OCAC), the authority that compiles data on petroleum product consumption, imports and exports.

The country's total fuel oil exports surpassed 1 million mt for the first time in its last financial year 2024-25 (July-June), surging nearly 59% from a year earlier to 1.44 million mt, Platts, part of S&P Global Energy, reported earlier.

The government's clampdown on fuel oil exports comes because of the cancellation of LNG cargoes, as only two ships arrived in March instead of the usual nine to 10 cargoes a month due to force majeure in Qatar, said Abdul Azeem, head of research at Al Habib Capital Markets Ltd., a Karachi-based brokerage.

"The government might be thinking that the delays in LNG shipments might lead to load-shedding across the country, and they might need to resume electricity generation from the fuel oil-run units for the comfort of consumers," Azeem said.

Electricity generation from fuel oil-powered utilities has risen to 619 GWh in the first seven months of the current fiscal year, compared with 261 GWh during the corresponding period a year earlier, according to data from the National Electric Power Regulatory Authority, received in late February.

Pakistan's domestic fuel oil consumption stood at 40,000 mt in February, compared with 50,000 mt in February 2025, while total fuel oil sales in the eight months of the current fiscal year have fallen 34% year-over-year to 300,000 mt, OCAC said.

The ongoing disruption in oil flows due to the US-Israel war with Iran has pushed Asia's benchmark high sulfur fuel oil cash differential to an all-time high on record, according to Platts data.

The cash differential for the Singapore 180 CST HSFO grade, which typically does not enter the bunkering pool and is used for power generation in South Asian countries such as Bangladesh and Sri Lanka, has also surged to its highest level in more than two decades, according to Platts data.

Platts assessed the Singapore 180 CST HSFO cash premium over the MOPS 180 CST HSFO assessment at $77.06/mt at the Asian close March 12, the highest on record, according to Platts data that goes back to 2001.