There is something both encouraging and quietly embarrassing about Pakistan’s recent push to establish a strategic oil reserve. Encouraging, because the policy is sound and the intent appears genuine. Embarrassing, because this conversation should have happened two decades ago, when the conditions were far more favourable, the foreign exchange coffers were fuller, and the warning signs were already visible on the horizon. The idea was not new. Economists had raised it. Analysts had argued for it. But the ruling class of that era, comfortable in the confidence that oil prices would eventually retreat, chose to wait out the storm rather than build a shelter for the millions of Pakistanis who had no choice but to stand in it. This time, at least, someone has listened.
The consequences of that earlier inaction are now embedded in Pakistan’s structural vulnerability. The country has for years operated with energy buffers so thin that any disruption in global oil markets, however distant its origin, transmits almost immediately into domestic pain. Pakistan currently maintains between twenty and thirty days of fuel cover through commercial stocks. The International Energy Agency recommends a minimum of ninety days. That gap is not a technicality. It is the difference between a country that can absorb a global shock and manage its response deliberately, and a country that finds itself at the mercy of events it neither caused nor controls.
The ongoing crisis around the Strait of Hormuz has made this exposure brutally visible. This critical shipping corridor, through which a significant portion of the world’s oil passes, has become a flashpoint of geopolitical tension, and Pakistan, with its dangerously shallow reserves, has felt every tremor. Fuel prices at the pump have climbed sharply. At certain points, serious concerns circulated about whether the country could sustain uninterrupted supply at all. These were not the fears of alarmists. They were legitimate, data-driven anxieties about a country whose energy security architecture was simply not designed to withstand modern volatility.
A properly structured strategic reserve would not make Pakistan immune to these shocks. No reserve system in the world provides complete insulation. But it would provide crucial breathing room. It would allow policymakers to respond to market disruptions with something other than panic. It would prevent the kind of instantaneous price spike that ripples through every sector of a fragile economy and lands hardest on the people who can least afford it. When the Iran conflict began, Pakistan’s weekly oil import bill surged by five hundred million dollars per week. Within days of hostilities intensifying, prices spiked by an astonishing one hundred and sixty-seven percent. A country with ninety days of reserves in hand does not experience that kind of vertical shock. It has time. And in economic crises, time is the most valuable resource of all.
Critics will raise the cost, and they are not wrong to do so. Building ninety days’ worth of strategic storage capacity carries an estimated price tag of around two billion dollars. For a country navigating IMF fiscal consolidation requirements and managing a chronically stressed balance of payments, that is a number that demands serious scrutiny. But the framing of this debate must be corrected. The question is not whether Pakistan can afford to build a strategic reserve. The question is whether Pakistan can afford not to. The two billion dollar figure is a one-time capital investment. The cost of operating without a reserve, as recent weeks have demonstrated, is recurring, compounding, and potentially catastrophic.
Every time a global event causes oil prices to spike and Pakistan has no buffer, the import bill balloons overnight. Every time the balance of payments comes under sudden pressure because of energy costs, foreign exchange reserves bleed, the rupee weakens, inflation accelerates, and the gains from months of painful fiscal discipline are eroded in a matter of days. The IMF’s consolidation targets are worth pursuing, but they become almost impossible to sustain when the country remains this exposed to external energy shocks. A strategic reserve is not in tension with fiscal responsibility. Over a meaningful time horizon, it is an expression of it.
The question of pace also matters. Some proposals currently under discussion contemplate a two-year timeline for building up reserves to the recommended level. That is reasonable as a completion target, but it should not become a reason to delay the start. The reserve does not need to reach ninety days before it begins to serve its purpose. Even thirty or forty-five days of strategic cover would represent a meaningful improvement over the current position. The critical thing is to begin, and to begin intelligently.
One practical path forward involves deferred payment arrangements. Once prices begin to stabilise from their current elevated levels, Pakistan could negotiate purchase agreements that allow reserve stocks to be accumulated without requiring the full capital outlay upfront. Several countries have used similar mechanisms during periods of fiscal constraint. It requires capable negotiation, credible sovereign standing, and careful structuring, but it is achievable. The alternative, which is to wait until financial conditions are perfect before starting, is a trap Pakistan has fallen into before, and it cannot afford to fall into again.
What the past several weeks have exposed, with a clarity that should leave no room for comfortable denial, is that energy security is not a secondary concern sitting below economic management on the list of national priorities. It is economic management. A country that can be destabilised in seventy-two hours by a crisis it did not cause, in a region it cannot control, through a commodity it cannot produce at scale, is a country that has not yet secured the foundations of its own economic stability. No growth target, no debt restructuring programme, no investment drive can deliver its full potential while this vulnerability remains unaddressed.
Pakistan has made the right decision. The reserve must now be pursued with the urgency and seriousness it deserves, not as a future aspiration to be revisited when conditions improve, but as an immediate strategic priority whose delay carries a cost the country has already paid, and cannot keep paying.
