Pakistan is slated to take delivery of its first-ever US
crude oil, one million barrel cargo of light WTI crude from Vitol, expected to
arrive in October 2025 at Cnergyico’s refinery in Karachi. This marks a pilot
spot cargo—if successful, Cnergyico may import one cargo per month thereafter
The move is part of a broader US–Pakistan trade agreement
focused on oil and energy cooperation, and to mitigate threatened 29% tariffs
on Pakistani exports.
Advantages of US Crude Imports
Energy
source diversification
Breaking reliance on Middle Eastern suppliers - Saudi Arabia and UAE)—who currently
account for nearly all of Pakistan’s crude oil imports—enhances energy security
and geopolitical flexibility.
Refinery
compatibility
Pakistan's largest refinery can process WTI Midland and cactus grades without
blending adjustments and may boost gasoline/ middle distillate production,
easing import reliance on refined products.
Trade
diplomacy tool
Importing US crude may be used strategically in tariff negotiation, potentially
lowering or avoiding the 29% US duty on Pakistani exports by helping balance
trade flows.
Challenges and Risks
Higher
logistics cost
Freight, insurance, and handling add around US$3 per barrel compared to
regional supplies. This higher cost may strain forex reserves unless oil price
spreads narrow.
Foreign
exchange pressure and inflation
Larger import bill could put pressure on currency reserves
and stoke inflation, especially if fuel prices are subsidized domestically.
Limited
climate if not managed well
US imports should be a strategic supplement rather than a primary sourcing
route, since over-dependence on long-distance crude can worsen trade and fiscal
balances.
Key Considerations
|
Factor |
Rationale |
|
Volume |
Target of 10% of total crude imports, around US$ one billion annually |
|
Pricing Arbitrage |
WTI's lighter quality and higher gasoline yield might offset
additional logistics cost, assuming favourable price spreads |
|
Refinery Capacity |
Cnergyico’s SPM-equipped 156,000 bpd plant is record-compatible; no
major technical hurdles noted |
|
Strategic Diplomacy |
The imports offer Pakistan leverage in US tariff negotiations and
broader market access |
The logical reply is that as part of a broader strategy Pakistan should import US crude oil. Use it to boost export negotiation leverage with the US. Diversify sources to improve energy resilience. Leverage light US crude to enhance domestic fuel yields.
Tread
carefully
Limiting imports to a test/ pilot phase to assess cost, logistics, and yield economics. Monitoring global price differentials—if WTI premiums shrink relative to Gulf crude, US imports may become more viable long-term. Avoiding overreliance—continue importing most crude from Gulf suppliers with more favorable logistics and financing terms.
Moral
of the story
Pakistan is entering a strategic test phase, set to receive one million barrels of US WTI oil in October 2025. If successful, limited monthly imports (10%) can support export negotiations, diversify supply, and potentially improve gasoline yields—even at some added logistical cost. However, unless price arbitrage improves, US crude should remain a tactical supplement, not replace traditional Gulf suppliers.
