No Price Reduction Even After Russian Oil Reaches Pakistan – Govt
State Minister for Petroleum Musadik Malik took a staggering U-turn after a months-long mantra of ‘cheap Russian oil reaching Pakistan by the end of May.’ Mr. Musadik stated that petrol prices would not be decreased even after the Russian crude oil consignment comes to Pakistan – again, a gloomy and uncertain look for the inflation-stricken masses of Pakistan.
In an energy conference, Mr. Malik concludes the whole episode with a single sentence stating that one cargo is not enough to lower the petrol prices in the country. We may decrease the price after receiving multiple oil consignments from Russia, he added.
A Big Miscalculation
Mr. Malik didn’t disclose the whole episode of not reducing the petrol prices. In fact, it was nothing more than a futile claim from the government officials. As per the reports, the higher costs concerning the transport and refining of Russian oil may hinder the price differential.
To be fair, Mr. Malik miscalculated the mathematics of this hollow and baseless claim. Pakistan currently imports oil from the Gulf region through Dubai, which is approximately 1,300 kilometers away from Karachi Port. On the other hand, the closest Russian seaport is situated around 8,000 kilometers away. As a result, this disparity in distances could potentially result in an extra cost of approximately $10-15 per barrel.
Furthermore, in contrast to Saudi Arabia’s refined oil, Russian crude oil will pose a challenge to Pakistani refineries, as they are optimized to handle lighter Arabian crudes. Consequently, refining the heavier crude could lead to additional costs. According to certain media estimates, this could result in an extra expense of around $4 per barrel.
Additionally, Pakistan must address the issue of refining Russian crude and its impact on the country’s product portfolio. Russian crude oil yields 50% furnace oil and 32% diesel, whereas Arabian oil yields 45% diesel and 25% furnace oil.
The government has taken the step, but the reality is “Indecisiveness becomes worse in the face of incompetence.”
What do you think about Mr. Malik’s statement denying cheap Russian Petrol and the mathematics behind the higher cost? Drop your thoughts in the comments section.