March 09, 2026 (MLN): South Asia’s energy landscape is increasingly diverging as soaring global oil prices, driven by escalating tensions between the United States and Iran, push neighbouring economies onto sharply different policy paths.
While Pakistan has been compelled to pass on the full impact of rising crude prices to consumers, announcing a record PKR 55 per litre increase in petrol, India has managed to keep retail fuel prices unchanged by leaning on strategic reserves and diversified import routes.
The contrasting responses exposed the gap in fiscal flexibility and energy security between the two countries.
India has chosen a price-shield approach, allowing state-run oil marketing companies (OMCs) to absorb temporary losses using margins accumulated when global oil prices were lower in 2025.
Pakistan, however, has opted for a full pass-through policy, largely due to conditions tied to its ongoing program with the International Monetary Fund (IMF), which restricts unfunded energy subsidies that could widen the fiscal deficit.
Following the latest revision, petrol prices in Pakistan have climbed to PKR 321.17 per litre, while in India, prices remain roughly INR 94.77 per litre in Delhi.
India's ability to maintain stable prices despite Brent crude approaching above $100 per barrel stems from a long-term strategy aimed at strengthening energy security.
India has accumulated strategic petroleum reserves and commercial stocks sufficient for roughly 50–74 days of consumption, giving policymakers breathing room during supply disruptions.
At the same time, the country has diversified its crude sourcing, increasing imports from suppliers outside the Strait of Hormuz, which remains vulnerable amid the current geopolitical tensions. As a result, around 70% of India’s crude now
arrives through routes unaffected by the ongoing naval blockade.
A temporary U.S. waiver allowing limited Russian oil purchases has also provided refiners with additional flexibility in managing supply.
Pakistan’s position is markedly different. Finance Minister Muhammad Aurangzeb and Petroleum Minister Ali Pervaiz Malik described the sharp fuel price hike as unavoidable.
Under the IMF’s Extended Fund Facility (EFF), Pakistan is required to maintain strict fiscal discipline. With the Petroleum Levy already near its ceiling, the government had limited room to cushion the global oil shock.
Higher fuel costs are expected to feed into transport and food prices, raising concerns about a fresh wave of inflation just as policymakers had begun anticipating monetary easing.
The industrial sector is also uneasy. Export-oriented industries, particularly textiles and manufacturing, argue that rising energy costs could erode competitiveness against regional rivals.
India, by contrast, is benefiting from short-term price stability, offering its manufacturers greater cost certainty even as global energy markets remain volatile.
To manage the ongoing volatility, Pakistan has announced a shift to weekly fuel price reviews, allowing authorities to adjust prices more frequently in line with global market movements.
India, meanwhile, appears comfortable holding the line for now. However, a prolonged disruption in global oil supply would eventually test even New Delhi’s buffers.
For India, strategic reserves and diversified supply chains offer a temporary shield. For Pakistan, constrained finances and IMF commitments mean that global volatility quickly finds its way to the fuel pump, and into household budgets.
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