Private dealers in Pakistan have been importing Iranian oil to combat the country’s inflation rate, which has hit historic highs in recent months due to a reeling economic crisis and shortage of foreign exchange reserves. According to a report by Geotv, Iranian fuel has been selling for as little as (PKR) 230 per litre, compared to the average retail price of diesel in Pakistan of (PKR) 288 per litre. This has generated respectable profits for private dealers, but has had a negative impact on local refineries‘ volumes and sales projections for the second quarter of 2023.
Impact on local refineries
Local refineries in Pakistan were already experiencing a drop in demand due to the weakening economy and rising costs of public transit. The popularity of Iranian oil has further exacerbated this situation. Refinery sources and market analysts have warned that local refineries are on the verge of shutdown as Iranian oil has „never been on this huge and unparalleled scale in the South-Asian country“.
Prohibited imports
Pakistan has been prohibited from importing Iranian oil since the United States imposed sanctions on the neighboring nation’s commerce in petroleum and petrochemicals in 2013. However, authorities have allegedly turned a blind eye to the imports due to depleting foreign reserves, according to refinery sources and analysts at Insight Securities.
Bilateral trade target set at $5 billion
Iran has also established six border markets to promote trade with crisis-hit Pakistan earlier this year. Iranian Consul General Hasan Noorain stated that the bilateral trade target has been set at $5 billion. He added that Pakistan and Iran have friendly relations, but the trade between the two sides has not developed as it should have so far.
(With ANI inputs)