Pakistan's refineries are maintaining domestic fuel supplies despite volatile crude prices and disrupted shipping routes, but uncertainty over changes to the petroleum pricing formula is complicating procurement and threatening investment in planned upgrades, industry officials say.

Usama Qureshi, vice chairperson of Cnergyico Pk Limited, said crude sourcing has become increasingly challenging amid extreme volatility and uncertainty surrounding international supply routes. "Crude procurement decisions have to be taken well in advance and involve substantial financial commitments. When markets are extremely volatile and at the same time, there are rumours about further changes in the domestic pricing formula, it becomes very difficult for refineries to commit to cargoes," he said.

Global diesel and crude markets have witnessed sharp price volatility amid the latest geopolitical escalation, while disruptions at the Strait of Hormuz and Bab el-Mandeb have made crude sourcing and movement of petroleum products increasingly challenging. Pakistan has so far remained relatively better positioned in terms of supply availability, with the Petroleum Division and refineries managing to keep the supply chain intact despite difficult international conditions.

The government now faces a difficult balancing act. Consumers need protection from exceptionally high international petroleum prices, but weakening refinery cost recovery could create supply risks precisely when securing crude and finished petroleum products has become more difficult. Asad Hasan, chief executive officer of National Refinery Limited (NRL), said the current crisis has demonstrated why domestic refining capacity should be treated as a strategic asset.