Pakistan left with only five days of diesel stocks

Fuel crisis deepens in Pakistan with five days of diesel stocks left

Pakistan has been left with only five days of diesel stocks following oil prices in the international market hitting around $112 per barrel that stood at $94 per barrel before the start of the Russia-Ukraine war.

The conflict between the two countries has caused the falling of global diesel stocks and other middle distillates to the lowest seasonal level since 2008.

The Oil Companies Advisory Council had already warned the Pakistani government about the diesel shortage crisis due to the depletion of stocks globally. Another reason was that Pakistani banks had also put the oil companies at high-risk category and refused to grant loans.

The Council had also written a letter to the Pakistani central bank governor to intervene in this regard.

The Pakistan State Oil (PSO) has informed the energy ministry about the situation in a letter sent to the director-general.

The company pointed out that oil marketing companies had defaulted in oil imports, especially high-speed diesel, from December to March because of the Russia-Ukraine war.

The PSO also said it had resulted in a shortfall of 205,000 metric tons of diesel imports from January to March 2022.

According to the US Energy Information Administration, distillate fuel oil inventories in the US fell by 21 per cent to 30 million barrels that were below the pre-pandemic five-year seasonal average and at the lowest level since 2005. The stock in Europe also fell by 8 per cent to 35 million barrels below the pre-pandemic five-year average at the lowest level since 2008.

Soaring crude oil prices will also impact the Indian market as the country is heavily dependent on imports to meet its energy requirements. Around 86 per cent of the country's crude oil requirements are met through imports. So clearly, the country's import bills are set to surge. The trade deficit will widen putting pressure on the country's current account balance.