PSO pays record $35.6 per barrel premium on diesel imports amid Strait disruption

Pakistan State Oil (PSO) has imported petroleum products at record premiums amid supply disruptions linked to tensions affecting the Strait of Hormuz, raising concerns over a sharp increase in domestic fuel prices, according to a news report by The Express Tribune.

The PSO reported that premiums on high-speed diesel (HSD) cargoes surged from around $12 per barrel to over $34 per barrel, with a recent shipment priced at $35.612 per barrel. The increase follows disruptions in global oil supply routes, particularly through the Strait of Hormuz, a key transit point for crude and refined products, which has led to higher procurement costs for Pakistan.

In a communication to the Oil and Gas Regulatory Authority, PSO highlighted the impact of elevated premiums and called for their consideration in the petroleum pricing mechanism.

The company stated that incorporating the latest premium into the pricing formula could raise the ex-refinery price of HSD from Rs496.97 per litre by Rs122.76 per litre, based on prevailing international benchmarks.

PSO noted that diesel imports are currently being largely handled by the company and proposed that these additional costs be reimbursed to oil marketing companies instead of being fully passed on to consumers.

It suggested that if prices are calculated using pre-conflict premiums of $5.10 per barrel, the impact on consumer prices would be around Rs60 per litre. If based on a previously applied premium of $23.15 per barrel, the increase would be approximately Rs40 per litre.

The company recommended that the difference between actual import costs and benchmarked values be adjusted through the inland freight equalisation margin (IFEM) mechanism for cargoes approved by the government.

It also proposed that similar treatment be extended to other oil marketing companies importing diesel during the current period.

Separately, price differential claims of oil marketing companies remain pending following the government’s decision to freeze fuel prices. The Oil and Gas Regulatory Authority has recently processed Rs38 billion in claims for 34 companies under an approved verification and disbursement mechanism aimed at improving transparency and timely settlement.