WASHINGTON: Even though Pakistan has not signed a price cap on Russian petroleum products that Washington backs, the United States has reiterated that Pakistan can purchase oil from Russia at a discount.
Ned Price, a spokesperson for the US State Department, told reporters at a news briefing on Tuesday afternoon that Pakistan can also take advantage of the concessions Washington has made to other nations to buy oil from Russia.
Mr. Price stated, “So, we have encouraged countries to take advantage of that, even those countries that have not formally signed on to the price cap,” allowing them to acquire oil at a steep discount from Russia in this instance.
To prevent Moscow from using the revenues to fund its war against Ukraine, the G7 and EU countries established a price cap of $60 per barrel on Russian oil on December 3, 2022.
The controlled purchase would only affect third nations like Pakistan because Europe and the United States no longer import crude oil from Russia. The main reason Islamabad hasn’t signed the agreement yet is that Pakistan doesn’t buy oil from Russia.
Mr. Price stated that the US strategy for purchasing oil from Russia is outlined in the price-cap mechanism it developed with the G7 and other nations.
Read: US bans Russian oil: What is next for oil and gas prices?
An official from the United States stated, “And the virtue of the price cap is that it allows energy markets to continue to be resourced while depriving Moscow of the revenue it would need to continue propagating and fueling its brutal war against Ukraine.”
We have made it clear that we deliberately did not sanction Russian oil. Instead, the price cap now applies to it. He asserted that the United States has made it abundantly clear that the time has come not to expand economic ties with Russia.
He continued, “However, we believe that the price-cap provides a mechanism to do that, we believe,” because “we understand the imperative of keeping global energy markets well resourced and well supplied.”
At a joint news conference held in Islamabad on Friday, Minister for Economic Affairs Ayaz Sadiq and Russia’s Energy Minister Nikolay Shulginov stated that they hoped to sign an oil deal by the end of March, allowing Pakistan to purchase Russian oil at reduced prices.
According to a joint statement released following their talks, the two sides had reached a preliminary agreement on the supply of Russian crude oil and oil products to Pakistan, with the technical details expected to be finalized by March.
Read: The EU’s ban on Russian oil, explained
The Russian minister stated, “We have decided that it would be a good idea for Pakistan to approach Gazprom and Novatek, two of the largest companies that produce LNG, in late 2023 to discuss the conditions” for purchasing LNG.
Pakistan, which is short on energy, pays $1.3 billion per month to import approximately 430,000 mt of motor gasoline, 200,000 mt of diesel, and 650,000 mt of crude oil.
Pakistan may soon face fuel shortages, according to market observers, as importers struggle to secure dollars to close deals. The country’s reserves of foreign currency are at their lowest level in nearly nine years.
The pressure could be lessened by purchasing oil from Russia at a lower price.