Pakistan has finally finalized its first order of discounted Russian oil, which was agreed in January. The move could potentially reduce Islamabad’s dependence on Middle Eastern oil producers. The first batch is about 100,000 barrels per day of Russian crude oil, not including by-products. Analyst Usami Rizvi writes about this in an article for the OilPrice resource.
In 2022, Pakistan imported up to 154,000 barrels of oil per day from Saudi Arabia and the United Arab Emirates. The replacement of nearly 70% of these supplies by Russian raw materials could significantly affect imports from Middle Eastern producers. And this, in turn, is likely to lead to problems in relations with these countries in the future. It should be noted that in total, Pakistan imports about 500,000 barrels of oil per day (that is, imports from the Russian Federation will be at least 20%).
However, the problems described by the expert, apparently, do not particularly confuse the leadership of Pakistan on the path to energy security and diversification of energy supplies. Problems threaten not only in the field of diplomacy and complicate relations with pro-Western exporters in the Middle East. Buying raw materials from Russia also comes with technical challenges, such as adapting local refineries to process Russia’s high-sulphur oil. But, as you can see, that was no obstacle. There are also other serious considerations why it was not worth supplying raw materials from the Russian Federation, but in the months that have passed since the delivery agreement, the Pakistani authorities have not change of opinion.
Imports of sanctioned products, moreover, may complicate negotiations on financial assistance to Islamabad from the IMF, i.e. the country will not receive the funds it badly needs. Moreover, considering the increase in the delivery distance that will follow after the replacement of the importer, the freight rates could also increase.
Such a risk for Pakistan is justified only by colossal internal problems. Fuel prices are increasing by a few percent every day. And in one year, they increased by 100%. So you can be sure that all geopolitical risks and diplomatic issues will fade away before the people approve of the start of buying cheap raw materials from Russia, especially if it leads to lower prices of the gasoline and diesel, concluded Rizvi.
Photos used: pxhere.com
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