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No objection to Pakistan’s decision to import oil from Russia: US State Dept

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  • “Each country is going to make its own sovereign decisions,” US State Dept says.
  • It says US never tried to keep Russian energy off the market.
  • Last week, Pakistan placed its first order for Russian crude oil.

WASHINGTON: Days after Islamabad placed its first order for Russian crude oil, the United States confirmed that it has no objection to Pakistan’s decision to import oil from Moscow.

“Each country is going to make its own sovereign decisions as it relates to its energy supply,” US State Department spokesperson Vedant Patel said during its weekly briefing.

Last week, Pakistan placed its first order for Russian crude oil under a deal between Islamabad and Moscow with one cargo to dock at Karachi port in May.

Pakistan’s purchase gave Russia a new outlet, adding to Moscow’s growing sales to India and China, as it redirects oil from Western markets because of the Ukraine conflict.

“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,” he said.

The spokesperson emphasised that steps need to be taken to ensure that “Russian energy markets are not turning out to be a windfall for Putin’s war machine”.

The spokesperson maintained that countries will make their own sovereign decisions. “We have never tried to keep Russian energy off the market,” he reiterated.

The Group of Seven (G7) coalition, last week, decided to keep a $60 per barrel price cap on seaborne Russian oil, despite rising global crude prices and calls by some countries for a lower price cap to restrict Moscow’s revenues.

The G7 and Australia made the decision to maintain the cap over the past few weeks after a review of the $60 price — set in December last year with an aim to reduce Moscow’s ability to finance its war in Ukraine.

The oil price cap bans G7 and European Union companies from providing transportation, insurance and financing services for Russian oil and oil products if they are sold above the cap.

The US and Britain have also imposed restrictions on Russian oil imports.

Since Europe and the United States no longer import crude oil from Russia, the controlled purchase would only affect third countries, like Pakistan. Islamabad has not yet signed the accord, mainly because Pakistan does not import oil from Russia.

Details of Pakistan-Russia deal

Under the deal signed by the officials from Islamabad and Moscow, Pakistan will buy only crude, not refined fuels, State Minister for Petroleum Musadik Malik told Reuters.

Imports are expected to reach 100,000 barrels per day (bpd) if the first transaction goes through smoothly, he said.

“Our orders are in, we have placed that already,” he said, confirming source-based information that the country would not buy refined products.

A source in Moscow who is familiar with the negotiations told the foreign news agency that the final deal was reached in recent days.

The Russian government did not respond to a request for comment.

Major Russian oil companies have discussed the possible supply of oil to Pakistan over recent months, two trading sources familiar with the talks said, but declined to disclose the names of possible suppliers. One of the sources, speaking on condition of anonymity, said Russia plans to supply Urals crude to Pakistan.

Islamabad imported 154,000 bpd of oil in 2022, around steady with the previous year, data from analytics firm Kpler showed.

The crude was predominantly supplied by the world’s top exporter Saudi Arabia followed by the United Arab Emirates. The 100,000 bpd from Russia in theory greatly reduces Pakistan’s need for Middle Eastern fuel.

The US dollar historically has been the currency of oil trade, but the Ukraine war has eroded its dominance as Russia avoids receiving a currency it has been largely blocked from using by Western sanctions.

Pakistan’s economic crisis meanwhile means it is desperately short of hard currency.

Malik declined to say whether Chinese yuan and the UAE dirham would be used for transactions. He also did not comment on the rate of imports.

“I will not disclose anything about the commercial side of the deal,” he said.

Pakistan’s Refinery Limited (PRL) will initially refine the Russian crude in a trial run, followed by Pak-Arab Refinery Limited (PARCO) and other refineries, Malik said.

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Bulls Reenter PSX: The KSE-100 Rises More Than 886 Points

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As the market surged more than 800 points in the early morning trade, bulls grabbed control at the Pakistan Stock Exchange.

During the first trading session, the benchmark KSE-100 index increased by 886 points to 61,350.48 points.

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Pakistan’s steel prices are rising; get the latest figures here

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Another increase in steel prices has resulted in higher construction expenses in Pakistan. The economic downturn and continuous shipping delays have resulted in sharp price increases for building supplies, which has an effect on those who are planning to construct homes.

Due to increased manufacturing costs and supply chain interruptions brought on by the Middle East crisis, the price of iron, commonly known as steel rebar, has increased by Rs5,000 per ton. Local and imported steel rebar now costs between Rs240,000 and Rs260,000 per ton as a result of this most recent rise.

The cost of branded iron went from Rs255,000 to Rs260,000 per ton, while the cost of local iron climbed from Rs236,000 to Rs240,000. Furthermore, the cost of scrap or unprocessed iron has increased to Rs160,000 per ton inin the iron and steel markets.

The impact of the skyrocketing steel prices will be exacerbated by any more interruptions in the raw material supply chain. The cost of cement, on the other hand, has somewhat decreased and is at Rs 1,246 per bag.

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Up 30% to Rs 5.1 trillion by mid-February, FBR collected

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The total increase in domestic taxes has been around 40%, whilst import duties and associated levies increased by 16% between July 2023 and January 2024.

With the recovery of the GDP and increased inspection of FBR collection, the growth in revenues accelerated.

Up to mid-February, FBR receipts increased by 30% to Rs. 5.1 trillion. Nevertheless, decreases in import tariffs over time and, more recently, import license limits implemented by the State Bank of Pakistan (SBP) to manage the country’s balance of payments in the aftermath of foreign exchange shortages, were mostly responsible for the decline in the rise of import taxes.

However, the impact of improvements in import valuation, which resulted in collections of Rs 151 billion, as well as the anti-smuggling campaign, which saw a surge of about 69% in the current fiscal year over the previous one, are also included in the income collected from imports.

The statement said that there was room to improve anti-smuggling operations by considering expanding Baluchistan’s customs force, which now only has 378 anti-smuggling employees out of 20,000 total.

The mobilization of domestic tax income, which accounted for more than 64% of all revenues received in the current fiscal year, was hailed in the statement as a welcome change.

In parallel, the percentage of import duties has decreased to 36% from over 50% just three years prior. The main drivers of this increase in revenue were the several taxes sources. From Rs. 1,751 billion to Rs. 2,447 billion, income tax receipts increased significantly—by 40%.

Banks, the petroleum and oil lubricants (POL) business, the textile industry, the electricity sector, the food industry, and a number of service industries were among the major income tax payers. Up to mid-February, FBR receipts increased by 30% to Rs. 5.1 trillion. Notable rise was also seen in sales tax receipts, which increased by 19% from Rs. 1,480 billion to Rs. 1,766 billion.

POL, the electricity sector, the food sector, the automobile sector, the iron and steel sector, and the chemical sector were important growth drivers.

The amount collected in federal excise taxes increased significantly by 61%, from Rs. 190 billion to Rs. 307 billion.

Taxes on tobacco goods, the cement industry, drinks, airlines, fertilizers, and the automobile sector were the main causes of this increase. The amount collected in customs duties increased by 14%, from Rs. 552 billion to Rs. 629 billion.

The POL, automobile, iron and steel, electronics, and food industries were among the main donors to customs duties.

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