The recent downturn in global crude oil prices has sparked hope for Pakistani consumers who have been grappling with high petroleum product costs. Industry insiders and market observers anticipate that this fall could translate into reduced petrol and diesel prices in Pakistan starting August 16, following the routine price review by the government.
Major Drop in International Crude Oil Prices
Over the past 11 days, international crude markets have experienced a significant dip. US crude oil has slipped by 5.71perbarrel,from5.71perbarrel,from69.26 to 63.48.Similarly,BritishBrentcrudedeclinedby63.48.Similarly,BritishBrentcrudedeclinedby5.72 per barrel, now trading at 65.98comparedto65.98comparedto71.70 earlier this month. This notable decrease is the primary driver behind expectations for lower petrol and diesel prices domestically.
Anticipated Reduction in Local Petrol and Diesel Prices
Market estimates suggest tangible relief for Pakistani motorists and transporters. The ex-refinery price of diesel could drop by Rs10 to Rs12 per litre, with petrol prices likely to fall by up to Re1 per litre. These figures, though preliminary, are based on current international trends and could change once final calculations are completed.
The Oil and Gas Regulatory Authority (OGRA) will finalize the new rates and forward its recommendations to the Ministry of Finance on August 15. Following approval from the prime minister, the federal government will issue a formal notification. These new rates will be effective from August 16 to August 31, potentially easing the financial strain for many households and businesses across the country.
Government’s Role in Adjusting Fuel Prices
Pakistan’s fuel pricing mechanism allows the federal government to adjust petrol and diesel prices in response to movements in global oil markets. The government regularly reviews rates every fortnight to reflect fluctuations in international prices and other cost factors.
On July 31, the government announced a reduction in petrol prices and an increase in diesel prices for the fortnight starting August 1. These changes were made to align domestic prices with international trends, while also factoring in taxes, levies, and other costs.
Current Petrol and Diesel Prices in Pakistan
As per the Ministry of Finance’s last notification, the price of petrol was set at Rs264.61 per litre after a reduction of Rs7.54. Diesel, however, saw an increase of Rs1.48 per litre, reaching Rs285.83 per litre. While the petrol price decrease was a welcome move, it was somewhat neutralized by adjustments in petroleum levies and other related costs.
Impact of Petroleum Levies and Other Charges
Despite the reduction in base fuel prices, the overall relief to consumers remains limited due to increased petroleum levies. Informed sources reveal that the levy on both petrol and diesel rose by Rs2.55 per litre as of August 1, bringing the total levy to Rs78.02 on petrol and Rs77.01 on diesel.
The climate support levy, a fixed charge of Rs2.50 per litre, continues to add to the cost of both petrol and diesel. Additionally, the freight margin on diesel increased by 20 paisas, now at Rs6.24 per litre. Dealer margins stand at Rs8.64 per litre for both petrol and diesel, while distributor margins are Rs7.87 per litre. These cumulative charges contribute significantly to the final price paid by consumers at the pump.
Factors Influencing Future Price Changes
While the sharp fall in global oil prices has raised expectations for further reductions in local fuel costs, the extent of consumer relief will depend on how the government manages associated levies and margins. The upcoming price review on August 16 will be closely monitored by the public and stakeholders, as many hope for meaningful financial respite amidst ongoing economic challenges.
