The transaction signals a shift in Pakistan’s US dollar-dominated export payments policy
Hundreds of tankers are parked outside an oil refinery in the Pakistan’s port city of Karachi. © ASIF HASSAN / AFP
Pakistan has paid for its first shipment of crude oil from Russia in Chinese yuan, Reuters reported on Monday, citing Pakistani Petroleum Minister Musadik Malik.
The cargo was delivered to the Karachi port thanks to a deal struck by Russia and Pakistan in January. The first order under the deal was placed in April.
Malik did not disclose any other details on the price or discounts applied to the purchase. According to the outlet, the transaction in yuan represents a significant shift in Pakistan’s US dollar-dominated export payments policy.
Russia signed the oil deal with Pakistan as part of a drive to diversify its export avenues after it was slapped with a collective ban by the EU, the G7, and their allies in December, along with a price cap of $60 per barrel.
Moscow redirected its oil flows to countries like India and China and negotiated payment settlements in currencies other than the US dollar due to sanctions, which effectively cut Moscow off from the Western financial system.
READ MORE: How Russia sanctions sparked global revolt against US dollar
According to previous reports, Pakistan had agreed to a per-barrel price of around $50-52 for Russian crude. Last year, Pakistan imported 154,000 barrels of oil per day, with roughly 80% of its supplies coming from Saudi Arabia, the UAE and other Gulf nations. Energy imports account for most of the country’s external payments. The hope is that discounted Russian crude will help stabilize oil prices in the country, which is facing high external debt, a weak local currency, and critically low foreign exchange reserves.
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