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Petroleum Minister Ali Pervaiz Malik said on Sunday that Pakistan was “considering” purchasing cheaper Iranian oil and gas, as reported by Dawn. The option of sourcing Iranian crude supplies has again become available after a temporary easing of US sanctions on Tehran, potentially allowing Pakistan to import discounted crude and refine it locally to produce higher-value petroleum products.

The statement came against a backdrop of declining international oil prices and easing Middle East tensions. Dawn reported that the government has already passed on the benefits of lower prices to consumers, with Prime Minister Shehbaz Sharif announcing on June 19 a reduction of Rs74 in petrol prices and Rs67 in high-speed diesel prices.

Coverage Comparison

Dawn's coverage of this development appears in two separate reports. One, focused on the ministerial announcement, highlights the potential economic benefits for Pakistan, citing import cost savings of $170-340 million if Pakistan imports 10-20 per cent of its total petroleum requirement at a discount, including freight savings. That report uses an optimistic tone, quoting Malik's remark that “good times are coming now.”

The other report, with a more neutral and informative tone, focuses on the technical and commercial challenges of refining Iranian crude. It details the experience of Pakistan Refinery Ltd, which previously imported Iranian crude under a long-term contract with the National Iranian Oil Company but halted purchases after US sanctions were imposed. Since then, no Iranian oil has been imported into the country.

Both reports draw on industry expert opinions, with one quoting a former head of a leading refinery in Karachi who commented on the changing scenarios and the temporary lifting of sanctions. The expert noted uncertainty over the next two months regarding the outcome.

Key Claims

  • Pakistan is considering purchasing cheaper Iranian oil and gas, according to Petroleum Minister Ali Pervaiz Malik, speaking to media in Lahore. This option became available after a temporary easing of US sanctions on Tehran.
  • Sourcing crude oil from Iran could generate import cost savings of $170-340 million for Pakistan, assuming it imports 10-20 per cent of its total petroleum requirement at a discount, including freight savings.
  • Local refineries are technically capable of processing Iranian crude, but commercial and operational challenges remain, particularly due to the high furnace oil yield and the absence of significant domestic demand for the fuel.
  • The government has significantly reduced petrol and diesel prices. On June 19, Prime Minister Shehbaz Sharif announced a Rs74 reduction in petrol prices and a Rs67 cut in high-speed diesel prices.
  • Pakistan Refinery Ltd had previously imported Iranian crude under a long-term contract with the National Iranian Oil Company, but purchases halted after US sanctions were imposed.
  • Indian refineries are mostly deep-conversion units equipped with hydrocrackers, hydrocokers, residue fluid catalytic cracking units, etc., giving them the flexibility to process crude ranging from heavy to light grades into value-added products like diesel and petrol.
  • Pakistan's diesel sales in May stood at 455,000 tonnes, down 32 per cent year-on-year and 17 per cent month-on-month.
A former head of a leading refinery in Karachi told Dawn that Iran's light crude could be refined locally, but the high furnace oil content makes it commercially unviable, especially with negligible use of furnace oil in the power sector. “The most notable aspect is the price of Iranian crude oil and whether it is pegged to an international benchmark, with parity to Arab crude. If there is no discount, refining at the local refinery is not economical,” he said. He also suggested that if Pakistani refineries are upgraded in the near future, they would have a choice to process heavy crude.

The development follows the US-Iran interim peace deal and the restoration of energy shipping in the Strait of Hormuz, which had been blockaded, causing a sharp increase in international oil prices. Malik maintained that the reduction in local prices was more than the one in international oil prices.