White House responds to Pakistan purchasing discounted Russian oil

Nearly a week after Pakistan announced it had placed its first order for discounted Russian crude oil, the USA has said it has no problem and will not oppose the deal. US State Department’s Principal Deputy Spoke­sperson Vedant Patel said the White House had left the door open for such purchases even though it had placed restrictions on Russian oil after the Ukraine invasion last year.

“Look, each country is going to make its own sovereign decisions as it relates to its energy supply,” said Patel.

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“One of the reasons that the United States, through the G7, has been a big proponent of the price cap is to ensure that steps are not being taken to keep Russian energy off the market because we understand that there is a demand for supply."

In December last year, the G7 and EU countries set a price cap of $60 per barrel on Russian oil. Even then, US stated Pakistan can purchase oil from Russia despitenot signing the Washington-backed price cap.

“But we also need to take steps to ensure that Russian energy markets are not turning out to be a windfall for [President] Putin’s war machine,” Mr Patel warned.

“And so, again, countries will make their own sovereign decisions. We have never tried to keep Russian energy off the market," he added.

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While the West, especially the US imposes heavy sanctions on Moscow, President Vladimir Putin has been selling oil at discounted prices to countries such as India and China.

Pakistan places the order

With Pakistan reeling under a severe economic crisis, the leaders in Islamabad finally decided to take the plunge to order Russian oil earlier this week.

Under the deal, Pakistan will buy only crude, not refined fuels, informed Petroleum Minister Musadik Malik. Imports are expected to reach 100,000 barrels per day (bpd

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The 100,000 bpd from Russia should significantly reduce Pakistan's dependence on fuel from the Middle East. Currently,Saudi Arabia and the United Arab Emirates are the main suppliers of crude to Islamabad.

According to statistics from analytics company Kpler, Islamabad bought 154,000 bpd of oil in 2022, roughly maintaining the level from the previous year.

Notably, Pakistan has been negotiating the release of $1.1 billion tranche of a $6.5 billion bailout package from International Monetary Fund (IMF) to avoid defaulting. Despite securingfinancingfromUAE and Saudi Arabiato meet the pre-conditions laid down by the monetary body, it will take some time for the money to roll in. Until then, Russia's discounted oil may allow Islamabad to breathe a little bit easy.

(With inputs from agencies)

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