Pakistan is paying an all-time high premium of $34 per barrel on petroleum product imports amid the supply crunch caused by the war in the Middle East.
Previously, Pakistan State Oil was paying around $12 per barrel over benchmark prices, the Express Tribune reported, citing a letter by the state company to Pakistan’s oil regulator urging it to include the higher premiums in local fuel prices.
The company, however, proposed that the government cover the difference rather than passing the record premiums on to end consumers. “Considering the fact that HSD is mainly being imported by PSO at the moment, we recommend that these exceptionally high premiums may only be reimbursed to PSO and any other importing OMCs (oil marketing companies) rather than passing the same directly to the ex-refinery price,” PSO said.
“We would like to highlight that the premium on the recently arrived HSD (high-speed diesel) cargo for PSO, namely MT Kaliban, from the Suez STS area is $35.612 per barrel,” Pakistan State Oil also wrote in the letter to the Oil and Gas Regulatory Authority.
Pakistan is heavily dependent on oil and gas imports, buying as much as 80% of its oil from abroad. In March, the Pakistan Institute of Development Economics warned that every additional $10 increase in international oil prices would add between $1.8 billion and $2 billion to the country’s energy import bill.
Pakistan depends on Strait of Hormuz flows as it imports LNG from Qatar, diesel from Kuwait, and crude from Abu Dhabi National Oil Company. This has made the country especially vulnerable to the supply shock resulting from the strait’s continued closure, with the government in Islamabad looking for alternative supply routes. Reports from early March said it was looking to secure a place among the preferred buyers of Saudi oil exported from the Red Sea port of Yanbu.
By Charles Kennedy for Oilprice.com
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