Pakistan orders three-month austerity drive to curb fuel use as global oil prices rise

What happened?

Pakistan’s cabinet has ordered a sweeping three-month austerity drive to slash fuel consumption and state spending, as escalating conflict in West Asia drives up global oil prices and threatens the country's fragile energy security.

Under the emergency measures approved on Thursday, government departments must immediately cut fuel allocations for official vehicles by 50 per cent. Only the armed forces, law enforcement, and essential services are exempt from the rationing to ensure security and emergency response are not compromised.

The general public will also face restrictions through strictly enforced early closing times for businesses. Retail markets must shut by 9 pm, wedding halls by 10 pm, and restaurants by 11 pm. Only pharmacies and medical laboratories are allowed to remain open through the night.

Why is the government taking action?

The intervention follows a sharp rise in domestic fuel prices earlier in the week. On Tuesday, the government raised the price of petrol by PKR 4.10 per litre, taking it to PKR 384.34. High-speed diesel rose by PKR 6.41 per litre, pushing it to PKR 415.83.

The price hikes have already stoked public anger. In Karachi, protesters gathered this week with portraits of Prime Minister Shehbaz Sharif to demonstrate against the rising cost of living. The anger comes just as the government is preparing to roll out a targeted subsidy scheme, promising PKR 100 per litre off fuel for motorbikes, rickshaws, and small cars under 800cc.

The domestic price spikes reflect a highly volatile global market. Recent attacks on oil infrastructure in Saudi Arabia, including an aerial strike that temporarily shut down the major East-West pipeline, have stoked fears of a broader supply crisis. For Pakistan, which relies heavily on imported fuel, these global shocks pose an immediate threat to the nationwide power grid and gas supplies.

What are the other cuts?

To contain costs further, the government has ordered a five per cent reduction in all non-salary state expenditure. Official foreign travel has been banned, and civil servants must replace domestic travel with virtual meetings. The government has also frozen the purchase of new official vehicles and prohibited state dinners, except for those hosting foreign delegations.

With West Asia hostilities showing no signs of easing, it is not yet clear whether these temporary measures will be extended beyond their initial three-month window or if further price hikes are on the horizon.