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Govt plans to buy oil in advance to benefit from low oil prices

oil prices

The federal government of Pakistan is taking benefit from the unprecedented collapse of oil rates in the international market. The government is considering to buy oil in advance. To materialize the plan, the Ministry of Energy has entreated an approval from the cabinet’s Economic Coordination Committee.

According to sources, the Ministry of Energy seeks to purchase 15 million barrels of oil for one or two years to take benefit from the decline of oil prices in the international market in the wake of coronavirus lockdown.

Within the last few months, there has been a radical decline in oil prices due to some international issues and mainly the issue of plunging demand for oil worldwide in the wake of coronavirus lockdown worldwide.

Just after the lockdown in march when the condition of every country was getting drastic, the organization of the petroleum exporting countries lowered its demand by 230,000 bpd that effected countries like Italy, Iran, South Korea, Israel, and Afghanistan.

Oil rates collapsed from 80 percent to 15 percent which is a huge decline in the international market and now the present government is considering taking advantage of the unfolding situation.

For the last two months, the Ministry of finance and the petroleum division are working together. They are operating to evaluate the possibilities to bring some portions of it to the country in order to import petroleum products. This import is directly or indirectly linked to basic prices. It includes motor gasoline, crude oil, and HSD, and LNG.

However, oil marketing companies opted to import refined petroleum like diesel, jet fuel, and petrol; they stopped purchasing from local refineries as locally produced petroleum products cost high than imported products.

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