Pakistan has recently suspended its purchases of Russian crude oil, citing difficulties faced by local refineries in extracting sufficient amounts of petrol and diesel from the imported crude when compared to their production from Gulf crudes. This move comes as the country grapples with a series of challenges amid an ongoing crisis. The decision by Pakistan to halt the import of crude oil from Moscow was influenced by the excessive production of furnace oil relative to petrol, adding to the nation’s woes.
The initial decision to import crude oil from Russia was motivated by attractive pricing. However, the actual financial benefits have turned out to be meager, with reports suggesting that Pakistan Refinery Limited, after processing the first Russian oil tanker’s arrival, experienced limited advantages. In fact, the financial gains were estimated to be as low as Rs0.50 to Rs1 per liter, rendering this import less impactful than anticipated.
Furthermore, the import of Russian oil did not lead to significant changes in pricing, in contrast to the outgoing government’s decision to increase petrol and diesel rates by up to Rs20 per liter. These developments highlight the complex interplay between global oil markets, domestic refining capabilities, and the broader economic challenges faced by Pakistan. The decision to suspend Russian crude oil purchases reflects the need for careful evaluation of the economic benefits in the context of local refining capacity and market dynamics.