Rising stakes

2026-03-26 - 04:40

WE all need this war to end. And we need it to end immediately. Already the impact is being felt around the world, but in Asia in particular. In Pakistan, its real impact will hit if it lingers for a few days more, but the fuel price hike already passed, and those in store, are enough to do more damage than you want to count. Here is a simple exercise. Take the various indices for international fuel prices: Brent, WTI, Dubai crude, and Murban (or Oman crude). Look at their prices over the month of March and you will notice two of them — Dubai and Murban (or Oman) — leaping ahead while the other two — Brent and WTI — climbing less sharply. This is significant because the former two are fuels used across Asia (including Pakistan) while the latter two are used primarily in Western markets. Asia is the hardest-hit region in the world by the oil price and supply disruptions that the war is producing. And across Asia, countries are taking extraordinary steps to manage the fallout. Visuals are now emerging of chaos at pumps in some parts of India and Bangladesh. Japan has authorised a release from its strategic reserves described as their “largest ever”, enough to cover 15 days of consumption. The release is larger than what it authorised after the Fukushima nuclear power plant disaster in 2011, probably the single largest energy shock Japan has ever experienced. Country after country is struggling with a fuel crisis that is only going to intensify in the days ahead. In the Philippines, President Marcos addressed the nation live to declare an “energy emergency” following record-high fuel price hikes that prompted strike calls from around the country. He promised free bus rides for students and schemes to subsidise fuel for taxis, motorcycles and public transport workers. In Thailand, the government is considering reviving an emergency law from the 1970s as fuel stocks run dangerously low and visuals emerge of a crush of buyers at fuel stations around the country as panic buying spreads and fuel stations run out of stock. The law gives sweeping powers to the prime minister “covering the production, sale, transport, possession, stockpiling, export and import of all types of fuel”, according to a report in their local press. “That means the government could, in principle, impose fuel rationing, restrict operating hours for factories, cinemas, entertainment venues and restaurants, set conditions on vehicle use, and control electricity consumption in buildings and for advertising. Violations can carry severe penalties, including jail terms and fines. These powers were designed to allow rapid, centralised action rather than relying on separate ministries to respond under ordinary laws.” In India, panic buying has spread, with police being called in some instances to manage order at fuel stations. The situation got bad enough to prompt a response from the government, which has tried to absorb the price shock in its fiscal buffers given that elections are approaching in some key states. Sri Lanka has rolled out an app-based rationing system that it developed in the days of their default, to ration daily sales of petrol per consumer, and allow the quotas to be tradable. All around Asia, examples are piling up. Country after country is struggling with a fuel crisis that is only going to intensify in the days ahead. And they’re all reaching for extraordinary steps, each pulling up whatever arsenal of measures they have in their toolkit, to try to manage shortages that are crippling their economies. No country is unaffected. Those who have passed on even a part of the burden to their citizenry are feeling the heat. Those who have not, like India, are facing skyrocketing subsidy bills and panic buying regardless of the assurances their government is issuing. From China to Japan, Australia to India, the Philippines to Indonesia, and all in between, everybody is reeling from the price and supply disruptions emanating from the blockage of the Strait of Hormuz. One by one, they are throwing out the old textbook. This is a crisis no market mechanism can manage. The state has to step in. Some of the countries have far larger stocks than Pakistan — from 45 to 75 days of cover versus Pakistan’s 28 days — and yet they are struggling to control the situation. None of them can afford to carry the full cost of the price hike on their fiscal accounts. India is trying, but it has a bit of an unwritten rule there that governments don’t adjust fuel prices in the run-up to an election. It just so happens that this is no ordinary fuel price shock; how long it can hold on is anyone’s guess. Pakistan has no choice but to navigate these waters. Our fiscal envelope is too weak to carry the burden of fuel price subsidies for very long. Having held them steady for two weeks now, the government is in the unenviable position of having to pass on another major jolt to the people to avoid derailing its fiscal framework altogether. It is developing rationing systems, which is fine, and hopefully the systems will work. It might consider freezing OMC margins too, and tell the oil companies to carry their share of the burden. But a price hike will become unavoidable within days now. The petrol dealers’ association thinks it can make some hay while the sun shines. Sensing desperation from the government, they are asking for an increase in their margins as well, otherwise they are threatening to shut their pumps. Their point is that their capital cost has gone up sharply with the price hike, and they need more liquidity to be able to manage their ability to buy petrol and diesel stocks for onward sale. This demand should be resisted. The message needs to go out that this is not the time to be making profits. It is the time to share the burden. The situation is going to intensify, and greed must not be allowed to call the shots. The writer is a business and economy journalist. khurram.husain@gmail.com X: @khurramhusain Published in Dawn, March 26th, 2026