Daily Times

A partnership that we couldn’t have fathomed ever materialising is finally bearing fruit. Against all odds, Pakistan has made its first-ever purchase of Russian crude oil earlier. Imports are expected to reach 100,000 barrels per day if the transaction goes through smoothly. By adding Russia to our list of suppliers, we’ll be far less dependent on Middle Eastern fuel, at least theoretically. But it won’t necessarily be any cheaper.

While Russia offers its crude at a discount, the transportation costs alone may offset any benefits gained through the price reduction. That combined with the fact that we have no currency swap arrangements in place with Russia means that it will be difficult to settle payments when the first shipment arrives. In fact, the deal has been so cloaked in secrecy that the technical details remain hidden from the public. For instance, if we’re buying unrefined oil, is our machinery even equipped to refine Russian oil which tends to be harsher than the sweet Middle Eastern blends we have grown accustomed to? We have a lot of things to mull over and if this is going to be a long-term arrangement, it’s best to get all this out in the open right now.

Technical concerns aside, Pakistan is in the midst of a devastating balance of payments crisis with fuel prices going through the roof-at this point, any fuel is a good fuel, especially considering our usual partners have raised prices to cater to more lucrative European markets.

The deal certainly doesn’t hurt Russia either which has been steadily expanding its influence in lower Asia after selling crude to both India and China. Clearly, Russia is trying to send a signal that it can still find a market for its products despite the Western world’s attempts to isolate it. A partnership between Moscow and Islamabad is particularly challenging for the US, who previously gave Pakistan the green light to trade with Russia but is still largely sceptical of Moscow’s designs in Asia. Either way, we must proceed with caution and ensure that all the cards are lined up in our favour when it’s time to make that first payment. *