A significant trade agreement between Pakistan and Russia has commenced, as the first shipment of reduced-price Russian crude oil has arrived in Pakistan.
On June 12, the government of Pakistan greeted the inaugural delivery of cut-price Russian crude oil, a substantial step in the strategic trade agreement inked by Islamabad and Moscow.
The development was celebrated by Prime Minister Shahbaz Sharif as a “realization of commitments” to the Pakistani populace. Likewise, Marriyum Aurangzeb, the Minister of Information, acknowledged it as a significant service to the nation through her social media post.
The shipment was offloaded in Karachi, Pakistan’s principal imports gateway. Pakistan, currently struggling with financial constraints, has been in dialogue with Russia to import reduced-price crude since February 2022. The conversation followed a visit by former Pakistani Prime Minister Imran Khan to Moscow, where he met with Russian President Vladimir Putin.
Khan’s Moscow visit coincided with Russia’s invasion of Ukraine, an event that led to tense relations between Pakistan and the U.S. In the aftermath of the invasion, and the subsequent imposition of Western sanctions, Russia has redirected its crude supplies to India, China, and other Asian countries, offering it at reduced prices after Western buyers boycotted it.
According to Pakistan’s deputy oil minister, Musadiq Malik, an initial deal was signed with Russia for the procurement of 100,000 tons of oil, to be transported in two shipments. The first of these shipments, the Pure Point, arrived in Karachi on Sunday, though the exact quantity of its cargo has not been disclosed.
While withholding specific details about the oil’s cost, Malik stated that Pakistan aims to maintain a regular import, hoping that domestic fuel prices would eventually decrease. Malik suggested that if a third of Pakistan’s oil requirements were met by Russia, the positive impact on prices would be felt by the common people.
There was no information shared about the transaction’s payment mechanism.
Sharif’s administration is currently dealing with a severe economic crisis, following the destructive floods last summer that resulted in over 1,700 deaths and caused damages worth $30 billion.
Furthermore, negotiations with the International Monetary Fund for reinstating the $6 billion rescue package have been suspended since December.