The upcoming revision of Fuel Price in Pakistan is expected to provide some happy news to Pakistani consumers, as industry officials anticipate a fall due to a declining trend in global oil prices. This comes after a significant increase in the cost of gasoline (petrol) and diesel in April, which put pressure on household budgets. The decrease in new fuel prices 2024 could offer some relief in the face of rising inflation.
Fuel Price in Pakistan
Experts in the field believe that the decline in global fuel prices is responsible for the anticipated price decline. The cost of gasoline has dropped by $1.86 per barrel to $107.16, which could result in a 3.75 rupee per liter decrease in the domestic market. The current petrol price in Pakistan of diesel also fell more drastically, by $4.3 per barrel to $104.76, which may save Pakistani consumers Rs. 7.85 per liter.
Experts in the oil industry warn that despite the present trend suggesting a price decline, the global market is still unstable. Prices have been declining for a few days, but they haven’t reached a stable point yet. The way the market performs in the days preceding the price revision will determine the ultimate effect on domestic prices.
Previous Price Increase and Revision Process
The most recent price review, on April 15, 2024, resulted in a considerable increase for both petrol and diesel. Petrol prices increased by Rs. 4.53 per liter to Rs. 293.94, while high-speed diesel (HSD) prices climbed by Rs. 8.14 per liter to Rs. 290.38. Every two weeks, the Pakistani government analyzes fuel prices and adjusts them to reflect global oil price fluctuations and exchange rates. Since the latest review, the Pakistani rupee has fallen against the US dollar, now trading at roughly Rs. 278.39 per dollar.
The government released the final modified pricing on Sunday night, and they are effective from the following Monday. These prices are computed using a variety of parameters, including:
- Monthly tax targets established by the government
- Estimated gasoline consumption in Pakistan
- Supply costs for Pakistan State Oil (PSO), the state-owned oil firm
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Balancing Costs and IMF Loan
Pakistan imports an incredible 85% of its oil requirements. This reliance on imported oil exposes the country to global fluctuation in prices. The latest price increases have led to growing inflation, which now stands at an alarming 20.7% year on year. The Pakistani government is now in a severe economic position. To obtain a $3 bn loan from the International Monetary Fund (IMF) in July 2023, they committed to a series of restrictions, such as tax rises, higher energy prices, and a market-determined exchange rate. While these steps are intended to create long-term economic stability, they place pressure on household budgets in the short term.
Despite the lower prices, navigating fuel price in Pakistan remains a complex issue. The government must balance consumer relief with generating revenue through fuel taxes and supporting state-owned oil companies. Pakistan’s dependence on imported oil further complicates matters. While a decrease in gas and diesel prices could offer some relief from inflation and high transportation costs, the final decision and its impact depends on the next few days’ movements in the global oil market.
