Geopolitical turmoil fears fuel price to rise to Rs200-225

KARACH:

Accelerating international geopolitical tensions over the Ukraine crisis pushed the international price of Brent oil up 5% on Friday to its highest level in seven and a half years at $95 a barrel. If Russia invades Ukraine, as speculated by the United States, the price of gasoline would rise to 200-225 rupees per liter in Pakistan. The next three to four days are very critical for the world, including Pakistan.

“If Russia attacks Ukraine, the price of oil should rise to $125 a barrel in world markets,” AA Gold Commodities director Adnan Agar said in an interview with The Express Tribune. “If this happens, the local price of petrol would jump to Rs200-225 per liter in Pakistan.” Rising oil prices would multiply a collector’s reading of inflation and hit global and national economies hard. “The world is still in the recovery phase of the Covid-19 pandemic,” he said. “The war, if it occurred, would transform global economic conditions into conditions similar to the global financial crisis of 2008.”

Pakistan, which recently put in place tough economic conditions agreed with the International Monetary Fund (IMF) under its $6 billion loan program, would be in big trouble in such a case. Pakistan imports wheat from Ukraine, therefore, food prices may also increase in the country. “The latest 5% increase in the price of Brent oil in the international market has already increased Pakistan’s oil import bill by $1 billion,” said Arif Habib Commodities CEO Ahsan Mehanti.

It’s not just about Ukraine’s political crisis. Whether the crisis worsens or improves, the international price of oil is expected to reach $125 per barrel by the end of June 2022. per barrel in 2023,” he said. He said the global research house made the prediction in early December 2021, when there was no geopolitical crisis like that of Ukraine at present.

The possible increase in the international oil price could inflate Pakistan’s oil import bill to a critical level. “The rupiah, however, would remain stable rather than become volatile against the US dollar and other currencies following a likely increase in imports,” he said. The United States announced the thawing of Afghanistan’s foreign exchange reserves worth $7 billion, while Pakistan allowed Kabul to trade in Pakistani rupees. “This development would support the stability of the local currency in the future,” Mehanti said. The national currency is hovering around 175 rupees against the US dollar these days amid the resumption of the International Monetary Fund (IMF) lending program in the current month.

The rupee hit an all-time low of Rs 178.24 in the recent past, according to the State Bank of Pakistan (SBP). The world, especially Europe, is doing its best to defuse tensions over Ukraine between Russia and the United States, as Europe imports about 50-60% of gas for consumption from Moscow. Moreover, Russia has repeatedly stated that its military buildup beyond its border with Ukraine is not aimed at attacking and invading Ukraine.

Agar said that if international political tensions do not defuse over the next three to four days, they could increase selling pressure on global stock markets, including the Pakistan Stock Exchange (PSX), and push the price up further. gold price. The price of gold jumped by Rs 1,150 to Rs 126,450 per tola (11.66 grams) in Pakistan on Saturday in line with the rise in the price of the commodity in world markets following geopolitical tensions.

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