ISLAMABAD: The move by Pakistan to look for alternatives to the Gulf countries for oil comes after the Strait of Hormuz was reportedly closed along with a statement made by the Houthis about prohibiting oil transport from Saudi Arabia through the Red Sea port of Yanbu across the Bab al-Mandeb.

Emergency Meeting Held as Tensions Rise in the Region

In light of Pakistan oil sources, Federal Minister for Petroleum and Natural Resources, Ali Pervaiz Malik did not waste any time and took steps to deal with the ongoing situation. An emergency meeting was called where CEOs and MDs of oil refineries in Pakistan were informed about the current situation.

The officials in the emergency meeting gave the refinery executives information regarding the security situation prevailing in the region due to increasing tension between the US, Iran, and Houthis.

Minister Urges Swift Response

In light of the gravity of the matter, Malik ordered refinery authorities to identify possible sources for import of crude oil right away in order to ensure that Pakistan oil sources remains uninterrupted. Such an urgent call was made considering the gravity of the matter since most of the energy supplies of Pakistan pass through the Strait of Hormuz.

The senior officials present at the meeting reported that the refinery authorities had taken swift action upon receiving this call. The refineries have now started contacting trading companies abroad in search of crude oil from US, Singapore, Nigeria, and Central Asia.

Why Do These Alternative Markets Matter?

The importance of these markets stems from the fact that goods sent from these markets do not pass through the Strait of Hormuz at all, providing a safer route for delivery under the present circumstances when there is instability in the region. The officials of the industry have also examined the possibility of importing goods from Oman's ports, but this option is relatively risky considering that Oman is closer to the region experiencing conflicts.

All the crude oil supply chains of Pakistan are not equally affected by these issues. While Pakistan Arab Refinery Company (Parco), Pakistan Refinery Limited (PRL), and National Refinery Limited (NRL) are still importing crude oil from the United Arab Emirates using the Port of Fujairah (which does not pass through the Strait of Hormuz), there have been increased concerns about the import of Saudi crude from the Red Sea port of Yanbu.

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Further Diplomatic Initiatives

Apart from efforts at the refinery level for securing supplies, there have also been some diplomatic initiatives taken by Pakistan to ensure continuity in the supply. Besides this, Malik separately met with the Saudi ambassador in Pakistan, Nawaf bin Said Al-Malki, who was asked to provide alternative means of oil supply from Yanbu.

Few Global Alternatives Make It Tougher

The pressing need for Pakistan to find alternative sources of oil is indicative of a larger global issue; there is not much possibility for the oil to be removed from the Middle East on an ordinary day. Two of the main alternatives for oil transportation include the pipeline from west to east in Saudi Arabia ending up in Yanbu and the pipeline in UAE transporting to Fujairah.

What is Ahead?

Despite the active involvement of refineries with international trading firms and ongoing diplomacy along with Saudi Arabia, the reaction of Pakistan to this supply problem is yet to be finalized. An 18-member government cabinet committee has been set up to study the overall effects of the Hormuz closing on the Pakistani economy, while also meeting on a regular basis depending upon the evolving situation. Government officials claim that once the international oil markets stabilize, cost trend lines can be better assessed.