Pakistan decides to expand strategic petroleum reserves as tensions rise in Middle East

A large number of oil tankers are parked at Shireen Jinnah Colony in Karachi on September 19, 2023.  - Online
A large number of oil tankers are parked at Shireen Jinnah Colony in Karachi on September 19, 2023. – Online
  • Sources say that Ogra will immediately develop a new framework.
  • Sources say that there is an urgent need to increase the storage capacity.
  • In-depth assessment is required to assess ultimate reserves and duration.

Sources in the Petroleum Division said that since the Middle East is surrounded by tension, the caretaker government has decided to expand the country’s strategic petroleum reserves.

The government move follows Israel’s ongoing war on Gaza, which began about a month ago after a surprise attack on an Israeli kibbutz by Hamas, the resistance group fighting for independent Palestine.

Sources said there is an urgent need to increase the storage capacity of petroleum reserves as Pakistan imports its fuel from other countries.

According to sources, the final reserves and how long they can last can be determined only after a thorough assessment of the country’s requirements.

Sources also said that the government has decided to develop a framework for strategic petroleum reserves through the Oil and Gas Regulatory Authority (Ogra).

“Ogra will immediately develop a new framework with the help of global experts,” sources said.

It said the new framework will determine domestic crude oil, refined petroleum requirements and storage, while also including the duration of strategic petroleum reserves of various products.

Global oil prices expected to rise: World Bank

Last month, the World Bank’s latest report estimated that global oil prices could range from $140 to $157 per barrel in the case of a “major disruption” scenario in the Middle East, similar to the impact of the 1973 Arab oil embargo. will be.

The report said global oil prices will average around $90 per barrel in the fourth quarter of this year and will fall to an average of $81 in 2023 due to slow economic growth, which will reduce oil demand.

However, the report also highlights a significant risk that an escalation of the ongoing conflict in the Middle East could lead to a sharp increase in oil prices.

The report shows that since the beginning of the Israel-Hamas war, oil prices have increased by only 6%, while the prices of agricultural commodities, most metals and other commodities have seen minimal changes.

The report discusses three risk scenarios based on historical conflicts in the region, with varying degrees of disruption. In the event of a “small disruption” equivalent to the reduction in oil production during the 2011 Libyan civil war (about 500,000 to 2 million barrels per day), oil prices could rise to $93 to $102 per barrel. fourth quarter.

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