Global oil rally inflates Pakistan’s landed fuel import costs, complicates bank financing

The cabinet committee monitoring petrol prices has been told that rising global oil prices are increasing the landed cost of imports, leading to larger transaction sizes and pressure on existing financing arrangements. Officials said the increase in import costs has expanded the size of Letters of Credit (LCs), creating operational challenges for importers and banks, The News reported. 

The Finance Minister Muhammad Aurangzeb directed authorities to engage with the State Bank of Pakistan and the Pakistan Banks’ Association to explore facilitation measures, including temporary enhancements and consortium-based financing.

The central bank indicated that prudential limits would be reviewed, while banks were urged to adopt flexible approaches to accommodate higher financing needs.

The committee, which met under the finance minister as part of ongoing monitoring of the energy sector, was informed that domestic fuel supply remains stable despite volatility in international markets.

Diesel stocks currently provide around 24 days of cover, while petrol availability remains stable, supported by imports and refinery operations.

Officials said one crude oil cargo is being discharged, with another expected to arrive shortly, while additional shipments are in transit and import plans for March and April are being managed.

Refinery throughput is expected to improve as incoming cargoes are processed, with efforts underway to optimise production.

The committee noted that global oil markets remain tight, with higher benchmark prices and cargo premiums linked to regional developments.

Members also reviewed domestic demand trends and noted increased offtake in recent weeks, directing authorities to monitor the situation to prevent hoarding and ensure smooth distribution.

Provincial administrations and regulators have been asked to strengthen oversight, including inspections where necessary.

Ahead of Eid and the harvesting season, the committee reviewed supply arrangements and said oil marketing companies will maintain operations to meet demand, with no disruption expected.

The meeting also reviewed efforts to improve monitoring through a digital dashboard for real-time tracking of stocks and supply conditions.

Officials said discussions with international suppliers are ongoing to diversify sources and strengthen supply security in the coming weeks.

The government reiterated its focus on maintaining uninterrupted fuel availability while managing the impact of global price volatility.