Web Desk – September 16, 2019
Pakistan’s energy supply is also at a risk due to mounted tensions in Middle East and South Asia
ISLAMABAD: Prices of petroleum products are likely to go up by up to Rs12 in coming days owing to an increase in international market following an attack on Saudi Arabia’s oil infrastructure last week, slashing the Arab kingdom’s oil production by half.
The attack that shut five per cent of global crude output has triggered the biggest surge in oil prices since 1991.
Europe’s benchmark Brent crude surged by 20 per cent and US counterpart WTI by 15 per cent as commodities trading got underway and after President Donald Trump warned that the US was “locked and loaded” to respond to the attacks that Washington blamed on Iran.
Tehran has rejected the claim but Iran-backed Houthi rebels in Yemen, where a Saudi-led coalition is bogged down in a five-year war, claimed Saturday’s strikes on two plants owned by state energy giant Aramco.
Trump says US ‘locked and loaded’ to respond to Saudi oil attack
Pakistan’s energy supply is also at a risk due to mounted tensions with India over revocation of the autonomous status of Occupied Jammu and Kashmir.
Pakistan faces a wide gap in energy demand and supply as it relies mainly on crude oil and petroleum product supplies.
POL prices are likely to be increased by Rs5 to Rs8 from October 1 and Rs10 to Rs12 in the following month, sources privy to development told The Express Tribune on Monday.
They said the impact of hike in crude oil price would be felt by the masses in November according to local mechanism used to determine prices of petroleum products in the country.
For a layman’s understanding, price at which the fuel (locally refined or imported) is available to oil marketing companies in Pakistan is called ex-refinery price. This landed cost is added with five different amounts – inland freight, petroleum levy, dealer’s commission, distributor’s margin and GST – before it becomes the ex-depot price i.e. the price at which the fuel is sold to a general consumer.
As tensions escalate in Middle East, Pakistan’s energy supply at risk
The sources said the government would reduce the taxes in a bid to lessen the burden of increased POL prices on the masses.
The giant Saudi plant that was struck cleans crude oil of impurities, a necessary step before it can be exported and fed into refineries. The attack cut Saudi output by 5.7 million barrels a day, or around half.
Saudi Arabia is not only the world’s biggest oil exporter, it has a unique role in the market as the only country with enough spare capacity to increase or decrease its output by millions of barrels per day, keeping the market stable.
Big countries such as the United States and China have reserves designed to handle even a major outage over the short term. But a long outage would make markets subject to swings that could potentially destabilise the global economy.