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Pakistan: Private dealers turn to Iran for fuel at a lower price


Amid an ongoing economic crisis and shortage of foreign exchange reserves, private dealers in Pakistan have turned to Iran for cheaper fuel as inflation in the country has hit all-time highs in recent months, according to a report published by geotv.

The refinery sources and market analysts stated that the popularity of Iranian oil negatively impacted the volumes of local refiners and was expected to negatively impact their sales in the second quarter of 2023.

Due to the weakening economy and individuals using public transportation due to rising costs, local refineries were already experiencing a drop in demand, ANI reported.

In Pakistan, the average selling price of diesel in recent months was (PKR) 288 per litre, while Iranian fuel sold for only (PKR) 230 per litre, generating respectable profits for private dealers.

Pakistan has been banned from importing Iranian oil since the United States sanctioned the neighboring country’s oil and petrochemical trade in 2013.

According to sources at the refinery and analysts at Insight Securities, authorities would turn a blind eye to imports due to depletion of foreign reserves.

“Iranian diesel infiltration is increasing and could replace as much as 25-30 percent of total diesel sales in Pakistan,” said a private dealer, quoted by geotv.

Local refineries in Pakistan are on the verge of closing as Iranian oil “had never been on this massive and unparalleled scale in the South Asian country”.

It is pertinent to note that Iran also established six border markets earlier this year to promote trade with crisis-hit Pakistan. Iranian Consul General Hasan Noorain stated that the bilateral trade target is set at $5 billion.

He added that Pakistan and Iran have friendly relations, but trade between the two sides has not developed as it should so far.

(with ANI inputs)

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.