Even though it hasn’t ratified a Washington-backed price cap on Russian petroleum products, the United States has underlined that Pakistan can buy oil from Russia at a lower price.
Ned Price, a spokesperson for the US State Department, told reporters during a news briefing on Tuesday afternoon that Pakistan can benefit from the incentives Washington has provided to other nations for purchasing Russian oil.
So, Mr. Price said, “we have urged nations to take advantage of it, even those who have not formally endorsed the price restriction, so that they may get oil in some circumstances at a significant discount over what they would otherwise acquire from, in this example, Russia.”
G7 and EU nations imposed a $60 per barrel price restriction on Russian oil on December 3, 2022, to stop Moscow from utilizing the proceeds to fund the conflict with Ukraine.
Only third-world nations, including Pakistan, would be impacted by the regulated purchase because Europe and the US no longer import crude oil from Russia. Pakistan does not import oil from Russia, which is the main reason Islamabad has not yet signed the agreement.
According to Mr. Price, the US strategy for acquiring oil from Russia has been outlined in the price-cap system that it negotiated with other nations across the world, including the G7.
“And the virtue of the price cap is that it allows energy markets to continue to be resourced while depriving Moscow of the revenue it would need to continue to propagate and fuel its brutal war against Ukraine,” the US official said.
“We have made the point that we have very intentionally not sanctioned Russian oil. Instead, it’s now subject to the price cap.” The US, he said, has been very clear that now was not the time to increase economic activity with Russia.
“But we understand the imperative of keeping global energy markets well resourced, well supplied, and the price-cap, we believe, provides a mechanism to do that,” he added.
At a joint news conference on Friday in Islamabad, Russian Energy Minister Nikolay Shulginov and Pakistani Minister of Economic Affairs Ayaz Sadiq stated that they hoped to finalize an oil agreement by the end of March that would allow Pakistan to purchase Russian oil at a reduced price.
The two parties struck an in-principle agreement for the delivery of Russian crude oil and oil products to Pakistan, according to a joint statement released following their discussions. Technical specifics will be finalized at the latest in March.
The two main LNG-producing enterprises, Gazprom and Novatek, should be approached by Pakistan to discuss the terms of an LNG purchase in late 2023, the Russian minister said.
Energy-starved At a monthly cost of $1.3 billion, Pakistan imports 650,000mt of crude oil, 200,000mt of diesel, and 430,000mt of motor gasoline.
Earlier this month, market watchers issued a warning that Pakistan may soon experience a fuel scarcity due to importers’ difficulty obtaining dollars to finalise purchases. The nation’s foreign exchange holdings are at their lowest points in nearly nine years. Reduced oil purchases from Russia might lower the strain.