Key Points
- Easing shipping risks could lower domestic fuel costs
- Bab El-Mandeb disruptions had raised freight and insurance expenses
- Pakistan remains heavily dependent on imported petroleum
ISLAMABAD: Pakistan expects domestic fuel prices to ease after vessels carrying the country’s energy supplies successfully exited the Bab El-Mandeb Strait, Petroleum Minister Ali Pervaiz Malik said on Tuesday.
According to reports, concerns over disruptions in one of the world’s busiest maritime chokepoints began to subside.
The minister said Pakistani ships transporting petroleum products had safely passed through the strategic Red Sea passage. The safe transit has reduced the immediate risk of supply disruptions and higher transportation costs that had threatened to push up domestic fuel prices.
“With our ships now out of Bab El-Mandeb, we expect some relief in fuel prices going forward,” Malik said, according to remarks reported by Arab News Pakistan.
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The comments come after days of heightened tensions in the Red Sea, where Yemen’s Houthis threatened commercial shipping and attacked Saudi oil facilities. The Houthi threats prompted several tankers to alter course and caused maritime traffic through the Bab El-Mandeb Strait to fall to its lowest level in months.
The Bab El-Mandeb Strait, which links the Red Sea to the Gulf of Aden and the Indian Ocean, is a critical route for global energy trade.
Disruptions there can force tankers to take the much longer route around Africa’s Cape of Good Hope, adding up to a month to voyages and increasing shipping costs by as much as $2.5 million per trip.
Pakistan imports the bulk of its crude oil and refined petroleum products, leaving it particularly vulnerable to volatility in international energy markets and disruptions along major shipping routes.
Pakistan faces fuel supply pressures
The country has faced several fuel price increases this year as tensions involving Iran, the United States and the Houthis disrupted maritime traffic in both the Strait of Hormuz and the Bab El-Mandeb Strait.
Oil prices have also retreated in recent sessions amid signs of easing tensions between Washington and Tehran.
However, analysts caution that shipping risks in the Red Sea and the Strait of Hormuz continue to limit the downside for global crude prices.
Pakistan’s government reviews domestic petroleum prices every fortnight based on movements in international oil markets, exchange rate fluctuations and changes in freight and insurance costs.
