Pakistan makes efforts to buy Russian oil at $50 per barrel barrel: Report

Pakistan will first import a Russian crude oil ship to test the country’s costs. (representative)


Cash-strapped Pakistan is making a concerted effort to procure Russian crude at $50 per barrel. barrel, at least USD 10 per barrel less than the price cap imposed by G7 countries because of Moscow’s invasion of Ukraine, media said on Sunday.

Crude oil is currently sold globally at USD 82.78 per barrel.

Pakistan, currently struggling with high external debt and a weak local currency, is desperate to buy cheap crude oil at discounted prices from Russia.

Moscow will respond to Pakistan’s request for discounted crude oil only after completing formalities such as mode of payment, shipping costs with premium and insurance, according to The News.

The first shipment of crude oil from Moscow is scheduled to arrive in Pakistan at the end of next month, paving the way for a bigger deal in the future, the newspaper said.

The shipment of crude oil from Russian ports will take 30 days, which would mean an increase of 10-15 USD per barrel due to transportation costs, it added.

Russia was initially concerned “about Pakistan’s seriousness in maturing the oil deal”, but in a recent meeting between officials from the two countries, Moscow asked Islamabad to import “one cargo of oil” as a test case to bridge the confidence gap, according to The Express newspaper Tribune.

Pakistan will first import a Russian crude oil ship to test the landed cost, The News reported.

As Pakistan faces a US dollar liquidity crunch, it would pay Russia in the currencies of friendly countries, which include China, Saudi Arabia and the UAE, it said.

Last December, Russia refused to give Pakistan a 30 percent discount on its crude oil after the Pakistani delegation asked for a price cut.

Energy accounts for the largest share of Pakistan’s imports, and cheaper oil from Russia will help Pakistan curb its rampant trade deficit and balance of payments crisis.

As Pakistan continues to suffer from a severe shortage of foreign exchange reserves, any short-term or long-term agreement with Russia to take crude and oil products at low prices will help reduce the nation’s financial burden.

Pakistan’s foreign exchange reserves, which fell to a critical low of $2.9 billion a few weeks ago, have now risen closer to $4 billion even as the country anxiously awaits the $1.1 billion tranche of financing from the International Monetary Fund . according to State Bank of Pakistan estimates.

Reserves at the start of the fiscal year on July 1, 2022 were about $10.309 billion, a drop of $7 billion in just seven months.

The catastrophic floods last year inundated a third of the country, displaced more than 33 million and caused $12.5 billion in economic damage to Pakistan’s already ailing economy.

(With the exception of the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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