A high-stakes clarification reveals Sri Lanka did not buy crude oil at $286, but soaring diesel prices still expose the brutal realities of global fuel market volatility and economic pressure.
Chairman of the Ceylon Petroleum Corporation D.J. Rajakaruna has firmly rejected claims that Sri Lanka purchased a barrel of crude oil at an alarming price of $286, clarifying that such reports misrepresented the actual fuel procurement details and created unnecessary public concern.
Addressing the controversy, the CPC Chairman emphasized that the corporation has never imported crude oil at such an inflated price, highlighting that the confusion stems from a misunderstanding of fuel classification in financial reporting and media narratives.
Based on official data presented, Rajakaruna stated that a shipment of crude oil received on March 11 was priced at $66.99 per barrel, while projections based on letters of credit opened for the following month indicate that the maximum expected price would be approximately $113.29 per barrel.
He further explained that the controversy originated from a report issued by HSBC, where the term “oil purchase” was broadly interpreted as crude oil, without distinguishing between crude oil, diesel, or petrol, leading to widespread misinterpretation.
The Chairman clarified that the generic use of the term “oil” in international trade discussions often fails to specify the exact type of fuel, which can result in misleading conclusions when analyzing pricing data.
However, Rajakaruna acknowledged that global fuel prices, particularly refined petroleum products like diesel, have surged dramatically due to international market conditions and supply chain pressures.
He pointed out that the average global price of diesel, which stood at $88.83 per barrel in February, had sharply risen to $199.70 by early April, reflecting a significant escalation in refined fuel costs.
Explaining the pricing mechanism, he noted that Sri Lanka calculates fuel import costs based on the average price over five days during the unloading period of shipments, combined with applicable premiums, which means that cargos arriving during peak market conditions incur significantly higher costs.
As a result, Rajakaruna admitted that under these pricing conditions, a barrel of diesel had indeed been purchased at a high of $286, underscoring the impact of volatile global energy markets on local procurement decisions.
He concluded by stressing that despite the high cost, securing fuel at such prices was necessary to maintain uninterrupted fuel supply across the country and avoid severe shortages that could disrupt economic activity and daily life.
