Pakistan plans fuel-saving steps after oil jump sparks panic

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ISLAMABAD – Pakistan’s government has implemented fuel-saving measures after oil prices surged above US$100 and gas output from the Middle East was disrupted, triggering panic buying in the import-reliant South Asian nation.

Prime Minister Shehbaz Sharif announced more than a dozen austerity measures on March 9 to deal with the current global fuel crisis triggered by the conflict in the Middle East.

Steps include halving the workforce and shifting to a four-day workweek.

Over the next two months, government expenditure will be cut by 20 per cent, and fuel allocated to government department vehicles will be reduced by half.

“The regional situation and war have affected our hard-gained economic stability, but the government is making every effort to prevent burdening the common man,” Mr Sharif said in an address to the nation. 

The measures come after the government, on March 7, hiked the cost of fuel by 55 rupees (25 Singapore cents), the country’s highest-ever increase, with Petroleum Minister Ali Pervaiz Malik warning that prices could be adjusted on a weekly basis.

There was brief panic buying at petrol stations on March 6, and at least one death after the government signalled that prices would rise.

West Texas Intermediate is now trading near US$95 a barrel, after earlier surging as much as 31 per cent.

Higher global oil prices could lead to further increases in domestic fuel rates, a move likely to feed into inflation and weigh on the rupee, which is sensitive to energy costs.

Among other measures, schools will remain closed for two weeks from next week, while universities will shift to online classes.

Cabinet members will not draw a salary for the next two months, and a ban has been imposed on unnecessary official foreign tours. Seminars and conferences will also be held in government buildings instead of hotels.

Mr Muhammad Awais Ashraf, the director of research at AKD Securities, said rising fuel prices could see inflation accelerate from 7 per cent to around 9.25 per cent in the April-June quarter. He said it is important to raise prices “as soon as they increase on the international market” to prevent petrol pumps from hoarding.

Ms Sana Tawfik, head of research at brokerage Arif Habib, added that by keeping domestic fuel prices elevated, “the authorities are attempting to manage demand and protect fuel stocks”.

During the last energy crunch four years ago, Pakistan suffered daily blackouts and implemented energy-saving measures that curbed economic growth.

Mr Sharif’s government has sought to stabilise the economy in recent years, helped by financial support from the International Monetary Fund. The government had projected 4.2 per cent growth for the fiscal year that began in July 2025.

Investors fear that “rising oil prices will affect the economic stability achieved in the last few years”, said Mr Mohammed Sohail, chief executive of Topline Securities.

Pakistan’s central bank kept its key interest rate unchanged on March 9, citing economic uncertainty. 

The government last week said the country, heavily dependent on energy imports from the Gulf, had enough stock of petroleum products to meet national requirements for around four weeks.

But the country’s largest gas distributor has already announced a cut in supplies to some of its industrial customers.

Sui Northern Gas Pipelines said in a notice to customers last week that it could not supply regasified LNG to fertiliser plants, having been notified of disruptions by its own supplier, Pakistan State Oil. BLOOMBERG