Pakistan’s 2025 crude oil imports expected to grow; product inflows steady

Pakistan refineries are expected to import 5% more crude oil in the financial year ending June 30, 2025, with the figure rising to 7% for the full 2025 calendar year, driven by a rebound in industrial production and economic growth, analysts based in the country said Nov. 26.

However, imports of petroleum products, including diesel and motor gasoline, could remain steady if Pakistan continues its push toward alternative energy sources, such as natural gas and renewables.

Pakistan recorded dismal economic growth over the last two financial years due to floods in 2022 and skyrocketing inflation, which saw the country's central bank hike its benchmark interest rate to an all-time high of 22% by June.

Government data showed that the gross domestic product shrank 0.2% in the year ended June 30, 2023, though it rebounded 2.4% in the following financial year.

The country's GDP is expected to expand in the coming years, with the government forecasting a 3.5% growth in the current financial year and a more than 4% growth in the following year ending June 30, 2026.

Pakistan's crude oil imports are expected to rise as the economy recovers and industrial activity picks up, boosting energy demand, particularly in the transport and power sectors, said Saad Hanif, head of research at brokerage Ismail Iqbal securities.

Since June, the State Bank of Pakistan has reduced its benchmark interest rate to a more-than-2-year low of 15%.

The industrial sector is forecast to grow by 4.4% in FY 2024-25, compared with a 2.4% growth in the year-ago period and 5.3% negative growth for the year ended June 30, 2023, government data showed.

Hanif said large infrastructure projects are expected to add to the energy demand.

Pakistani refineries imported 3.14 million mt of crude oil over July-October, rising from 2.5 million mt in the same period a year earlier, according to data from the Pakistan Bureau of Statistics.

In the financial year ended June 30, 2024, crude oil imports totaled 9.05 million mt, increasing from 7.82 million mt a year earlier.

Fuel smuggling

A rise in agricultural output is also anticipated to bolster Pakistan's crude oil demand, while the government's drive to eliminate fuel smuggling is expected to increase diesel and motor gasoline consumption, resulting in refineries processing more crude oil, said Mustafa Mustansir, head of research at brokerage Taurus Securities.

The smuggling of Iranian petrol continues to pose a significant challenge for Pakistan, as it undermines legitimate fuel imports. Despite efforts to combat this illegal trade, the presence of more affordable Iranian fuel frequently incentivizes smuggling, especially in border areas.

This situation disrupts the formal oil sector and impacts government revenues, as smuggled fuel is usually sold without taxes or regulation, complicating efforts to manage the country's energy needs and balance fuel import bills, analysts have said.

However, Pakistan's crude oil imports could slow if higher global oil prices strain its foreign reserves, Hanif said. The government's efforts to conserve energy and improve efficiency could also curb demand.

Pakistan's oil consumption increased by just 2% to 5.18 million mt in the first four months of the current financial year, according to data from the Oil Companies Advisory Council, the authority that tracks consumption, imports and exports.

In the four months to Oct. 31, motor gasoline sales rose 4% to 2.52 million mt, and diesel sales increased 5% to 2.10 million mt compared with the year-ago period.

Overall petroleum product sales in the year ended June 30, 2024, fell 8% to 15.28 million mt, with motor gasoline consumption declining 4% to 7.14 million mt and diesel consumption slipping 2% to 6.26 million mt.

Crude oil production in the country was around 66,903 b/d, according to the latest government data for the week ended Nov. 6.