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Pakistan State Oil (PSO) has purchased 520,000 tonnes of high sulphur fuel oil (HSFO) for delivery between August and October, and 110,000 tonnes of low sulphur fuel oil (LSFO), according to Reuters.

The HSFO deal is reported to be worth between $29.91 and $33.22 per tonne, whilst the LSFO purchase is said to have been closed at $96.89 a tonne. Details regarding the sellers were not disclosed.

Pakistan's leading oil marketer typically purchases 500,000-600,000 tonnes of fuel oil per month of 120-180 centistoke (cst) fuel oil. The majority of the country's supplies come from the Middle East due to the freight advantage because of the proximity of the region to Pakistan, versus East Asian players.

The company typically buys from fuel oil players such as Bakri, Vitol, Trafigura and Glencore. Up until the end of last year, PSO had also been a regular purchaser of fuel oil from Sharjah-based FAL Oil, until the UAE firm was blacklisted by PSO after failing to meet its contractual agreements. Since then, FAL Oil has also been blacklisted by the United States due to its alleged links with Iran.

The fuel oil purchased by PSO is mainly used for power generation. Demand usually peaks during the summer, when less hydropower output means Pakistan has to turn to fuel oil-powered plants.

Pakistan is one of the few growth areas for the fuel oil market in the world as its electricity is still generated by oil-fired plants, while other countries have turned towards other power generation solutions due to environmental concerns.

PSO also acts as an intermediary for the supply of bunker fuel to the country's national shipping company Pakistan National Shipping Corporation (PNSC) as well as to Pakistan's navy.