Pakistan is turning to its Gulf allies to solve a long-standing vulnerability: the absence of strategic petroleum reserves. A newly proposed bonded storage scheme with Saudi Arabia, Kuwait, and Qatar could allow foreign oil to be housed on Pakistani soil, with Islamabad retaining the right to buy it during emergencies. The plan, unveiled by Petroleum Minister Ali Pervaiz Malik, comes as the US-Iran conflict disrupts shipments through the Strait of Hormuz, exposing the country's fragile energy supply chain. Main Developments Pakistan will host crude oil and refined products from Saudi Arabia, Kuwait, and Qatar under a bonded scheme, where those nations finance the storage at their own cost and can export globally from Pakistani territory. Minister Malik announced the initiative during a press conference in Lahore, expressing gratitude to the three governments for their cooperation. Under the arrangement, Pakistan retains a critical safeguard: in the event of a conflict, it can purchase the stored resources at a predetermined price to meet domestic needs. The commercial framework, drafted with assistance from Aramco and other major companies, has already been submitted to the Economic Coordination Committee (ECC) following directives from Prime Minister Shehbaz Sharif. Malik expects a decision next week. Read also: Trump Board Insists Gaza Deal Only Path After Netanyahu Rejects The urgency stems from the ongoing US-Israel war on Iran, which has effectively blockaded the Strait of Hormuz, causing unprecedented petroleum price hikes. Pakistan, which imports roughly 90% of its energy needs, has been particularly hard hit, with domestic production at just 70,000 barrels per day against a demand of around 500,000 barrels. Background Pakistan has long lacked a strategic petroleum reserve, leaving it exposed to supply shocks and price volatility. Plans to boost domestic storage capacity first surfaced in May, but the current crisis has accelerated the timeline. The government has been revising fuel prices nearly daily since mid-July, a shift from the weekly adjustments that began when hostilities with Iran renewed. The bonded scheme idea is not entirely new, but it marks a significant departure from traditional reserve-building. Instead of investing billions upfront, Pakistan is leveraging its geography and security to attract foreign partners. The minister noted that storing crude for one month would require $500 million, with an additional $300-400 million for underground systems—funds the cash-strapped government lacks. Why It Matters This deal could transform Pakistan's energy security posture without straining its finances. By hosting foreign oil, the country gains a de facto reserve that can be tapped during emergencies, potentially shielding consumers from the worst of global price shocks. It also strengthens ties with key Gulf allies, who gain a secure storage location near major shipping lanes. However, the scheme carries risks. In a conflict, Pakistan might need to invoke its purchase option, but the terms—including pricing and availability—remain unclear. The government's ability to enforce the agreement during a crisis is untested. Moreover, the near-daily price revisions have already strained public trust, despite officials claiming to offer maximum relief. What's Next The ECC is expected to deliberate on the bonded scheme next week, with Malik promising visible progress if approved. In parallel, the government is pursuing other energy initiatives: Turkiye's Turkish Petroleum will soon begin offshore drilling in Pakistan's territorial waters, and tenders for liquefied petroleum gas (LPG) open on Monday. A leading international company is also preparing a comprehensive energy roadmap, to be presented to national leadership in the coming months. Long-term questions remain about Pakistan's ability to invest in its own storage infrastructure and accelerate indigenous exploration. The minister said the leadership would debate these issues in the upcoming months, while also working to clear circular debt and outstanding liabilities inherited from previous administrations.