Pakistan welcomes first Russian crude oil shipment amid economic crisis
Pakistan has welcomed its first shipment of Russian crude oil, marking a new chapter in the relationship between the two nations. The cargo, containing 45,000 metric tonnes of crude oil, arrived in Karachi, with an additional 50,000 metric tonnes expected later this week. Prime Minister Shehbaz Sharif hailed the arrival as a “transformative day” for the economically troubled country.
As Russia faces sanctions from Western powers due to its invasion of Ukraine, the Pakistan deal provides Moscow with a new oil market, following India and China. Musadik Malik, Pakistan’s junior minister for petroleum, announced that petrol prices in the country will decrease once the Russian supply becomes regular, benefiting the nation’s citizens.
Pakistan’s economy is currently in crisis, with a severe shortage of foreign currency for fuel imports. The arrival of the Russian oil shipment comes at a crucial time, as the country’s foreign reserves amount to less than US$4bn, enough to cover less than four weeks of imports. Furthermore, Pakistan awaits a US$1.1bn bailout package from the International Monetary Fund (IMF) as part of a US$6.5bn loan programme set to expire this month.
Energy sector analyst Farhan Mahmood explained that Pakistan imports nearly 80% of its domestic petroleum requirement, with an import bill of US$13bn in 2022-23. However, he predicts a decrease in demand for the next financial year, resulting in a reduced import bill of US$10bn. While the Russian oil import is part of a pilot project, Mahmood cautioned against expecting immediate significant changes in the country’s economic situation.
