Shipping Crisis Threatens Pakistan Fuel Prices

Pakistan could face another growth in fuel costs in the coming weeks as the rate of transporting crude oil throughout major shipping routes has escalated by 258 percent.

Key points

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• That is a massive growth from $6.50 per barrel in July.
• The timing is particularly significant as Pakistan has already been dealing with higher fuel costs and rising international energy-market risks.
• While markets have largely focused on crude oil futures, the physical oil market is facing another major pressure point: shipping.

Meanwhile, the cost of transporting 2 million barrels of crude oil from West Africa to China has climbed to around $23.59 per barrel, according to the latest market data.

That is a massive growth from $6.50 per barrel in July. The shipping cost has therefore jumped by regarding 258 percent in just two months.

This matters since the rate consumers ultimately pay for fuel is influenced by more than the headline crude oil cost. Transportation, freight, insurance and other supply-chain costs can additionally raise the cost of bringing petroleum products to markets.

Countries like Pakistan rely heavily on imported crude oil and petroleum products and a prolonged growth in international shipping costs could add pressure to the domestic fuel bill.

Notably, the timing is particularly significant as Pakistan has already been dealing with higher fuel costs and rising international energy-market risks. As of September 18, petrol sits close to Rs. 390 per litre while diesel remains above Rs. 400 per litre.

For context, a sharp rise in freight costs can additionally produce oil imports more expensive even if crude rates themselves do not rise at the same pace.

For Pakistan, that could mean the next fuel-price review will depend not only on where crude oil trades, but additionally on how expensive it becomes to bring that oil home. Stay Connected with ProPakistani.

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Taken together, the developments around shipping Crisis Threatens Pakistan Fuel Prices point to a situation that is still moving, and the coming days should bring more clarity.