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Russia has agreed to supply crude oil, diesel, and gasoline to Pakistan at discounts, Pakistan’s Minister of State for Petroleum, Musadik Malik, said on Monday.
Monday saw the beginning of the EU embargo and the associated price cap of $60 per barrel on Russian crude oil, which the EU and the G7 imposed in order to reduce Putin’s oil revenues but keep Russian oil flowing.
Many large customers in Asia haven’t joined the price cap mechanism, but China and India, for example – Russia’s top crude oil buyers now – are demanding steep discounts for the Russian grades.
Pakistan, for its part, has struggled a lot with procuring energy this year after the surge in prices for oil, natural gas, and coal.
Malik led a visit to Russia last month, and now, he told local media, “Our visit to Russia turned out to be more productive than planned.”
The minister, however, didn’t go into details whether Pakistan’s crude oil imports from Russia would comply with the $60 price cap, or how much the discount was.
Pakistan is also seeking to negotiate long-term deals with Russian firms for the supply of liquefied natural gas (LNG), the Pakistani minister said.
Last month, an official from the petroleum ministry said that Pakistan had no other option but to ration natural gas supply this winter, with gas provided three times a day for cooking to households, amid acute shortages and a forex crisis in the world’s fifth most populous country.
The energy crisis in Pakistan has deepened this year, and now, natural gas supplies will be very limited for households, according to officials.
Pakistan has been experiencing an energy crisis as the country cannot afford to import a lot of energy products at the current high prices. The stronger U.S. dollar and the sky-high LNG prices have worsened the country’s finances, with foreign exchange reserves down in October to their lowest level in three years.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com