Difficult to imagine buying Russian oil at this time: Miftah Ismail

Pakistan's Finance Minister Miftah Ismail said on Tuesday that Islamabad has asked both Russia and Ukraine to sell it wheat, stressing that sanctions on Moscow mean it will be "difficult for him" to imagine buying oil from it.

"We have asked Ukraine and Russia — whichever country can sell us wheat, we'd be happy to buy wheat from them," said Ismail in response to a question during an interview with CNN's Becky Anderson late Tuesday evening.

Anderson then asked if Russian oil was "out of the question".

"The previous government wrote a letter to Russia — that letter was not responded to. Russia has also not offered us any oil, and it is now under sanctions. So its very difficult for me to imagine buying Russian oil," responded Ismail.

Anderson referred to "other countries" buying Russian oil, mentioning India's example.

"If Russia were to offer us oil, at a cheaper rate and if there were no sanctions on Pakistan buying Russian oil, then sure — we'd consider that. But at this point, it will not be possible for banks in Pakistan to open LCs (letters of credit) or to arrange (finances) to buy Russian oil — nor has Russian Federation offered to sell us any oil."

Ismail's statement comes at a time when oil prices extended a bull run and rose $2.13, or 1.8%, to $123.80 a barrel on Tuesday after the European Union agreed to a partial and phased ban on Russian oil and China decided to lift some Covid-19 restrictions.

Rising prices of oil, which forms a heavy component of Pakistan's import bill, have put pressure on the cash-strapped economy already embroiled in talks with the International Monetary Fund (IMF) that has linked removal of energy subsidies to revival of the stalled $6-billion Extended Fund Facility (EFF).

Anderson's question also coincides with a Reuters report that stated India has received 34 million barrels of discounted Russian oil since Moscow invaded Ukraine on February 24, according to Refinitiv Eikon data, more than trebling the value of total imports from Russia, including other products, compared with the same period of 2021.

Read the story here: India’s imports of cheap Russian crude surge

India’s oil imports from Russia have been rising since February, as Asia’s third largest economy and the world’s third biggest oil importer, turned to deeply discounted Russian oil, mostly Urals crude, to cut its imports bill.

Meanwhile, Pakistan that saw its inflation reading hit 13.4% in April, prompting the central bank to raise the key interest rate more than expected (by 150 basis points to 13.75%), is now looking to cut fuel subsidy as means to showing its commitment to the IMF for the release of a $900-million tranche.

It raised petroleum rates by Rs30 per litre – the single largest increase in one go on fuel – with its energy minister saying that another increase could be in the offing before June 30.

The move prompted a series of rate-revisions the very next day with flour prices hitting Rs980, an increase of Rs180, at government-owned utility stores and raising fear of higher inflation in the coming days.

However, while commodity prices jumped, the country's currency closed higher and registered its third-successive gain against the US dollar amid rekindled hope that the IMF programme was now closer to being revived and would pave way for further lending by other sources.

The rupee closed at 198.46 after a day-on-day appreciation of 60 paisas or 0.30% on Tuesday.