Pakistan State Oil Signs Petroleum Supply Deal With Oman as It Diversifies Away From Hormuz

Pakistan State Oil (PSO) signed a sale-purchase agreement with Oman's OQ Trading Limited (OQT) on October 8, formalising a petroleum import deal that had been stuck since 2021. PSO disclosed the signing to its shareholders in a stock exchange filing the following week, after the federal cabinet and the PSO board cleared it.

A deal five years in the making, finished now

The agreement sits under a government-to-government energy cooperation framework that Pakistan and Oman signed back in May 2018, but the commercial terms between PSO and OQT had never been finalised. Pakistan's Economic Coordination Committee approved the sale-purchase agreement in August, and the signing on October 8 was the step that turns that approval into an active supply contract. A PSO official, who was not authorised to speak publicly on the matter, said the company "engaged with OQT for finalising a draft SPA for the supply of petroleum products."

What the deal does not say

PSO's disclosure and the cabinet approval do not specify the volumes, pricing formula or duration of the agreement. Muhammad Saad Ali, head of research at Lucky Investments Limited, described the arrangement as mainly precautionary: "a diversification so that there is a backup, in case war escalates." Pakistan's Petroleum Minister Ali Pervaiz Malik and a ministry spokesperson did not respond to requests for further detail on commercial terms, including whether Oman would extend the kind of discount Kuwait Petroleum has offered Pakistan in the past.

Why Hormuz keeps forcing this

PSO's standing import contract runs through Kuwait Petroleum, a route that analysts say depends heavily on transit through the Strait of Hormuz. That strait has been intermittently disrupted since the US-Iran war escalated this year, driving the oil-price volatility that has fed directly into Pakistan's fuel pricing and forcing Islamabad to conserve petroleum stocks rather than rely on a single, uninterrupted supply line.

The pressure has not been limited to oil. Qatar, Pakistan's main LNG supplier, declared force majeure on its contracts after Iranian strikes damaged its Ras Laffan export facility, and Pakistan has had to negotiate individual tanker crossings directly with Iran just to get contracted gas cargoes through. The Oman deal extends that same diversification logic to crude and refined products.

Where this fits in a longer scramble

Pakistan has spent much of the past several months lining up alternative routes and suppliers to insulate itself from a strait it has no control over. PARCO has arranged crude cargoes from Abu Dhabi National Oil Company through the port of Fujairah, which sits outside Hormuz, and Islamabad has separately asked Saudi Arabia to prioritise supplies routed through Yanbu on the Red Sea. The continued US naval build-up in the region, including a third carrier strike group deployed near Hormuz, has done little to settle the question of how reliably commercial tankers can transit the strait.

None of these individual deals, including the one with Oman, fully replaces the volumes Pakistan has historically moved through Hormuz. What they add up to, PSO's own framing suggests, is a hedge: multiple smaller supply lines that can keep fuel moving even if the main one through the strait is cut again, as it was during the market shock from Iran's tanker attacks in September.

Build Better Pakistan's Energy Desk is tracking Pakistan's fuel and gas supply diversification and will update this piece once commercial terms of the Oman agreement are disclosed.