Pakistan’s Refineries Hit by a Rare Problem as Petrol Prices Fall

Pakistan's refineries are facing another financial challenge as the international cost of petrol has fallen below the rate of crude oil, turning refinery margins negative for the first time in recent history and adding pressure to an already struggling sector.

Key points

• On November 5, the daily margin dropped further to negative $5 per barrel.
• The trend is visible in international cost data compiled by OGRA and Topline Research.
• By November 5, petrol rates had fallen below crude oil costs, pushing refining margins into negative territory.
• Refining margins, commonly known as cracks, represent the difference between the cost of refined petroleum products and the cost of crude oil employed to produce them.
• The development comes as domestic refineries are already facing pressure from the lately imposed Rs.

According to Topline Research, petrol refining margins fell to negative $1 per barrel on a seven day rolling average basis as of November 6, with international petrol rates at $105.90 per barrel compared with Dubai crude oil at $106.90 per barrel. On November 5, the daily margin dropped further to negative $5 per barrel. Petrol Rates Fall Below Crude Oil.

For context, the trend is visible in international cost data compiled by OGRA and Topline Research. The chart demonstrates petrol and Dubai crude costs moving relatively closely during much of October before both declined sharply toward the end of the month. Petrol Cost Plunges to 2-Month Low.

Refining margins, commonly known as cracks, represent the difference between the cost of refined petroleum products and the cost of crude oil employed to produce them. When petrol sells for less than the crude oil required to produce it, refiners face pressure on the profitability of petrol production. Rs. 49 Per Liter Levy Adds Pressure.

Notably, the development comes as domestic refineries are already facing pressure from the lately imposed Rs. 49 per liter levy on petrol.

In practice, the combination of negative international petrol margins and the extra levy is anticipated to further squeeze refinery profitability.

As international fuel cost movements and domestic levies weigh on refinery margins, the latest development could add to the financial challenges facing Pakistan's refining industry. Stay Connected with ProPakistani.

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In short, pakistan's Refineries Hit by a Rare Problem as Petrol Prices Fall is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.