Page 4 - AsianOil Week 31 2022

AsianOil COMMENTARY AsianOil

South Asia’s energy

crisis set to worsen

The energy crisis gripping South Asia looks set to

worsen as fuel suppliers increasingly hold back

from selling oil to the region

POLICY SOUTH Asia is struggling with an ongoing While commodity prices have dropped back
energy crisis that shows no signs of abating, and at least somewhat since earlier this year, weak
WHAT: indeed looks set to worsen instead. More and currencies have kept energy import costs pro-
South Asia’s energy crisis more fuel suppliers are increasingly hesitant to hibitively high for some countries, including
looks set to worsen. sell oil to the debt-ridden countries in the region, those in South Asia. Now, the situation is being
and some banks have also stopped financing and exacerbated by fuel suppliers being increasingly
WHY: facilitating payments for energy imports. hesitant to sell oil to the region and certain
A growing number of fuel Governments in the region are turning to banks stopping financing energy imports or
suppliers is avoiding measures including implementing power cuts facilitating payments for them.
the region while some and energy rationing and seeking financial Fuel traders have been reported as saying
banks have also stopped assistance in a bid to turn things around before they are hesitant to sell refined products such
financing energy imports. the crisis worsens. Nonetheless, there have been as gasoline and fuel oil to Pakistan in particu-
warnings that the situation could spiral. lar on concerns that it could struggle to make
WHAT NEXT: payments. Pakistan State Oil received just one
There is speculation Under pressure offer to sell the products in July, having had
about current conditions The crisis across the region has been exacerbated up to eight companies participating in pre-
spiralling into a new by commodity prices rising in the wake of the vious gasoline tenders. Data from Vortexa
financial crisis. war in Ukraine and reaching levels at which show that its imports of gasoline, diesel and
South Asian countries would struggle to afford fuel oil were down 15% month on month as
to buy fuel. Countries that are heavily dependent of July 19.
on energy imports while also having low foreign The country has also struggled to secure LNG
exchange reserves – including Pakistan and Sri cargoes on the spot market recently, receiving a
Lanka – have been particularly vulnerable to record-high bid for one cargo, which it ended
current market conditions. up turning down. And while some banks are

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