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Pakistan could face a crunch in fuel supplies in February as banks have stopped financing and facilitating payments for imports due to depleting foreign exchange reserves, traders and industry sources said.

The South Asian nation is facing a balance of payments crisis and the plummeting value of the Pakistani rupee is pushing up the price of imported goods. Energy comprises a large chunk of Pakistan's import bill.

Pakistan typically meets more than a third of its annual power demand using imported natural gas, prices for which shot up following Russia's invasion of Ukraine.

"There is no shortage this fortnight. If we don't have LCs (letters of credit) open right now, we might see shortages in the next fortnight," a senior official at one of the oil companies told Reuters.

A letter of credit issued by the importer's banks is a standard form of payment guarantee in the oil trade to the exporter.

Oil traders, however, are shunning countries such as Pakistan and Sri Lanka due to an acute shortfall of foreign exchange. Pakistan on Sunday raised petrol and diesel prices by 16% to 249.80 Pakistani rupees ($0.9373) a litre and is in talks with the IMF to unlock a suspended bailout package.

State-owned refiner Pakistan State Oil (PSO) and Pakistan LNG Ltd have left a flurry of fuel tenders unawarded in the last couple of months.

Oil traders, however, are shunning countries such as Pakistan and Sri Lanka due to an acute shortfall of foreign exchange. Pakistan on Sunday raised petrol and diesel prices by 16% to 249.80 Pakistani rupees ($0.9373) a litre and is in talks with the IMF to unlock a suspended bailout package.

State-owned refiner Pakistan State Oil (PSO) and Pakistan LNG Ltd have left a flurry of fuel tenders unawarded in the last couple of months. (Reuters)