Pakistan Oil & Gas_Oil prices exhibit near-term weakness, (AKD Daily, Sep 13, 2022)
AKD Daily
Pakistan Oil & Gas: Oil prices exhibit near-term weakness
- WTI prices have traded down by 2.1% so far in Sep’22, having reached a low of US$81.2/bbl on 8th September, 2022. The recent weakness is attributable to renewed COVID-19-related lockdowns imposed in different regions across China, expected to dent demand for oil .
- Continued tightening in the developed nations is expected to hamper demand for crude oil, which has further pressured oil prices. To note, the Bank of Canada and ECB increased interest rates by 75bps each in their respective meetings, and the US Fed is expected to take similar action in its upcoming meeting.
- Heading into the winter months, energy demand for heating purposes is expected to rise in Europe. At a time when natural gas prices are trading at their highs and availability of the fuel is in short supply, a shift to alternative energy sources—including crude oil—is expected. The higher demand during the winters is expected to cushio n international oil prices.
- Weaker crude oil prices are expected to offer a much-needed breather to Pakistan’s economy, with the country being a net importer of energy. Based on FY22 imports, a US$2/bbl drop in crude oil prices reduces the country’s annual import bill by US$320mn. Sustained lower prices could present the opportunity for the GoP to collect higher rates of PDL.
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