Shipping Crisis Threatens Pakistan Fuel Prices

Recent market data reveals that the cost of transporting crude oil across major shipping routes has surged by 258 percent, potentially leading to another increase in fuel prices in Pakistan. While crude oil futures have been the main focus, the physical oil market is encountering a significant hurdle: shipping costs. The price of moving 2 million barrels of crude oil from West Africa to China has shot up to approximately $23.59 per barrel, up from $6.50 per barrel in July.

This represents a staggering increase of about 258 percent within just two months. Shipping expenses, along with transportation, insurance, and other supply-chain costs, play a crucial role in determining the final price consumers pay for fuel. Countries like Pakistan, which heavily depend on imported crude oil and petroleum products, might face increased domestic fuel costs if international shipping expenses continue to rise.

As of September 18, petrol is hovering around Rs. 390 per litre, while diesel is above Rs. 400 per litre. A substantial rise in freight costs could make oil imports more expensive, even if crude prices do not increase at the same rate. The situation is particularly critical for Pakistan, as it has been grappling with higher fuel prices and mounting international energy-market risks.

Recently, Ukraine launched a drone attack on Moscow, targeting its primary oil refinery, days after President Trump announced an agreement between Ukraine and Russia to refrain from striking energy targets.