Fuel prices in Pakistan are on the verge of a substantial reduction, promising a significant relief for the nation’s consumers. It is anticipated that the cost per litre could plummet by as much as Rs. 18. Initial projections indicate a potential decrease of Rs. 5-6 per litre for High-Speed Diesel and a substantial drop of Rs. 17-18 per litre for MS Petrol, with the changes slated for implementation on October 31.
This optimistic outlook is contingent on two crucial factors. Firstly, international fuel prices must continue their favourable trend, remaining stable or even decreasing. Secondly, the Pakistani Rupee, which has been on a 28-day winning streak against the US dollar, must retain its strength.
If these conditions persist, local petrol and diesel prices are expected to hit Rs. 297-298 and Rs. 265-266, respectively, in the upcoming fortnightly pricing revision set for October 31, 2023. This marks a remarkable shift in the direction of fuel prices, especially when contrasted with the previous fortnight’s review. During that period, the interim government had enacted a substantial reduction, trimming petrol prices by a substantial Rs. 40 per litre and high-speed diesel prices by Rs. 15.
The impending drop in fuel prices is largely attributed to the impressive performance of the Pakistani Rupee and the decline in international prices of High-Speed Diesel and MS Petrol by $1.3-3.5 per barrel in the preceding week. If these forecasts hold true, it will signify the third consecutive decrease in fuel rates following a series of three consecutive increases.
To provide some context, between August 15 and September 15, consumers witnessed a relentless surge in petrol and high-speed diesel prices, which climbed by Rs. 58.43 and Rs. 55.83 per litre, respectively. This price escalation pushed rates to an unprecedented high of Rs. 331-333 per litre, a burden for the public.
However, the scenario has since shifted, thanks to a significant recovery in the Pakistani Rupee, which crossed the threshold from below 300 to above 278. Consequently, fuel and diesel rates experienced a commendable reduction of Rs. 52 and Rs. 26 per litre, respectively, on the 1st and 15th of October.
Furthermore, it is worth noting that the Pakistani Rupee, while showing resilience, has seen a slight depreciation of 1 per cent compared to the last fortnightly average, settling at 280.5/$. This is a marginal shift from the previous average of 277/$. Simultaneously, international benchmarks like WTI, Brent, and Arablight have observed reductions of approximately 4.3 per cent, 3.2 per cent, and 4.2 per cent, respectively, when compared to the previous week.
The calculations underpinning these projections are grounded in the actual expenditures for the first 12 days of the current fortnight, with estimates shaping the remainder of the outlook. This anticipated drop in fuel prices could bring much-needed respite to consumers and a more stable economic environment in Pakistan.
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