The PSO Kuwait diesel supply line, which has fed Pakistan with diesel and jet fuel since 1975, will continue. Pakistan State Oil (PSO) and Kuwait Petroleum Corporation (KPC) agreed during a PSO visit to Kuwait to keep supplies flowing and to update the terms of existing arrangements to match current market conditions, Business Recorder reported on Thursday. KPC will also use Pakistan’s storage and port facilities under the government’s revised customs bonded storage policy. For transporters, airlines and farmers, the deal matters because diesel still costs Rs83 a litre more than before the war began in late February.
The short version
- PSO and KPC agreed to continue diesel and jet fuel supplies from Kuwait to Pakistan, with terms aligned to prevailing market conditions.
- KPC will use Pakistan’s storage and port facilities under the revised Customs Bonded Storage Policy; fuel could be sold locally or re-exported.
- The two sides also discussed KPC investment in gas, refining, storage, shipping and logistics in Pakistan. No volumes or prices were disclosed.
- Diesel is Rs364 a litre from 12 November, down from Rs378 two days earlier but still above its pre-war Rs281.
What happened
A PSO delegation led by chief executive Jowad Ahmed Cheema met KPC’s senior leadership in Kuwait, including KPC chief executive and deputy chairman Sheikh Nawaf Saud Al-Sabah, and Sheikh Khaled Ahmed Al-Sabah, KPC’s managing director of international marketing and chief executive of Kuwait Oil Tanker Company. Business Recorder reported that both sides agreed to continue the PSO Kuwait diesel supply and jet fuel supply, and to improve the terms and conditions of existing arrangements in line with market conditions. The report did not say what those terms are, or what volumes are involved.
The talks covered petroleum supplies, storage, shipping, refining, lubricants and investment. KPC will use Pakistan’s storage and port facilities under the recently revised Customs Bonded Storage Policy, and remaining documentation is expected to be completed soon with the relevant Pakistani departments. Cheema said PSO “is committed to translating these discussions into tangible outcomes over the next 50 years.” In August, PSO and KPC marked 50 years of a relationship that has supplied gasoil and jet fuel to Pakistan without interruption since 1975, Business Recorder reported.
Why it matters
Diesel moves most of Pakistan’s freight, runs tractors and tube wells, and powers generators. A reliable Gulf supplier matters more in a year when the Iran war disrupted Gulf shipping and pushed petrol to a peak of Rs458.41 a litre on 3 April. Ogra has cut diesel in daily steps this month, but as Knock-On noted in its report on the latest petrol price cut in Pakistan, prices remain well above pre-war levels.
Diesel is still Rs83 a litre above its pre-war price
High-speed diesel price in Pakistan, Rs per litre, 2026
The storage element may matter as much as the supply line. In August the Economic Coordination Committee approved a revised scheme letting foreign suppliers keep ownership of fuel held in customs bonded storage at Port Qasim, Keamari, Hub and Gwadar, with duties and taxes paid only when a Pakistani buyer clears it for local use, Arab News reported. Fuel can be sold to licensed oil marketing companies and refineries, or re-exported. The original 2023 version attracted no foreign supplier, Arab News and The Express Tribune reported, so a KPC commitment would be the scheme’s first big test. Pakistan has made a similar offer to Saudi firms, as covered in our report on Saudi LPG shipments and tax-free oil storage.
The knock-on effects
First order: PSO Kuwait diesel supply security
Continued cargoes from Kuwait reduce the risk of diesel and jet fuel shortfalls for PSO, the largest fuel marketer, during a period of volatile Gulf shipping. Updated terms could change PSO’s import costs, but no figures were given, so the price effect is unknown.
Second order: fuel stocks held closer to home
If KPC holds bonded stocks at Pakistani ports, local buyers could draw on fuel already in the country. Under the scheme, the government keeps limited access to bonded fuel in formally declared emergencies, paying international prices, Arab News reported.
Third order: investment and re-export trade
KPC investment in refining, storage or shipping would bring foreign capital into a sector the government wants to open up, including through this year’s privatisation plans, which may include PSO. Re-exports from Pakistani ports could also earn storage and handling fees. These are possibilities, not commitments.
Who could benefit
- Transporters, farmers and airlines: steadier diesel and jet fuel supply.
- Port and storage operators: potential bonded storage business at Port Qasim, Keamari, Hub and Gwadar.
- Shipping and logistics firms: possible KPC investment in shipping and logistics.
Who may face pressure
- Local refineries: more imported product held in bonded storage could compete with domestic output.
- Smaller oil marketing companies: PSO’s secured supply strengthens its position.
- Fuel users: if updated contract terms raise import premiums, part of the cost could reach pump prices.
What to watch
- Completion of the remaining documentation, which both sides expect “soon”.
- Any disclosure of the new supply terms, volumes or premiums.
- Whether KPC becomes the first foreign supplier to set up bonded storage, and where.
- Ogra’s daily diesel price notifications as Brent reacts to US–Iran diplomacy.
Sources
- Business Recorder, PSO, Kuwait Petroleum agree to continue diesel, jet fuel supplies to Pakistan, 12 November 2026
- Business Recorder, PSO and KPC mark 50 years of partnership powering Pakistan, 24 August 2026
- Arab News, Pakistan approves foreign-owned fuel storage plan, with Gulf states among potential participants, 25 August 2026
- The Express Tribune, Oil storage guidelines revised, 11 August 2026
- Business Recorder, Govt further decreases petrol price by Rs3, diesel’s by Rs7 per litre, 11 November 2026
- Dawn, Govt slashes petrol price by Rs8 per litre, high-speed diesel by Rs7 in another reduction, 10 November 2026
This is analysis, not investment advice. Figures are as of 12 November 2026. Knock-On is not affiliated with any political party.
Leave a Reply