Global oil supply disruptions leave Pakistan reeling

Supply disruptions caused by the ongoing Ukraine Russia crisis have become a bane for Pakistan, which is struggling to secure diesel supplies due to a global crunch, reported Bloomberg.

Sanctions imposed on Russia by the West amid its Ukraine invasion has pushed traders to focus on European markets, leaving companies like Pakistan State Oil (PSO) wanting oil supplies.

As per the report, PSO has not been able to secure additional shipments from its main supplier Kuwait Petroleum Corp (KPC), as the supplier is preferring Western clients.

Pakistan’s largest oil retailer requested KPC for more diesel and bought cargoes from the spot market, a PSO spokesman said. However the “product is moving toward the West” and there is now a need to diversify international supplies, the official said.

The development comes as supply chain disruptions created by the ongoing Russia-Ukraine conflict has shot up commodity prices, especially oil, in the international market, adding to the woes of oil-importing countries like Pakistan, which is already facing a widening trade deficit amid a ballooning import bill.

As per latest trade figures released by the Pakistan Bureau of Statistics, Pakistan petroleum imports witnessed an increase of 100.78% growth as they reached $13 billion in July-February 2021-22 compared to $6.5 billion during the same period of the last fiscal year.

The imports registered 17.74% negative growth in February 2022 and stood at $1.245 billion when compared to $1.514 billion in January 2022; however, they registered 54.74% growth on a year-on-year basis in February 2022, compared to $804.85 million during the same month last year.

Meanwhile, the report said that the Oil and Gas Regulatory Authority (OGRA) has asked PSO to buy fuel for the country’s private retailers for the next three months as rising costs are making it difficult to break even.

The report added that PSO purchased a diesel cargo for late March on the spot market at a price three times above that of its agreed term contract, while a purchase tender for an April-loading cargo went without offers.