Pakistan is likely to slash petroleum prices for the third straight fortnight from May 29 after global oil prices dropped sharply and import premiums eased, according to industry estimates shared on Wednesday.
Initial calculations circulating in the oil sector suggest petrol prices may fall by PKR 8.54 per liter in the upcoming review. Meanwhile, high-speed diesel (HSD) could witness a bigger cut of PKR 30.91 per liter.
The estimates are based on average global prices recorded between May 25 and May 29. However, they do not include any exchange-rate adjustments.
If approved, the ex-refinery price of petrol will decrease from PKR 277.06 per liter to PKR 268.52 per liter. Similarly, diesel prices are expected to drop from PKR 322.28 per liter to PKR 291.37 per liter.
This possible reduction follows two back-to-back price cuts announced earlier this month. During the last fortnightly review, the government reduced petrol prices by PKR 15.39 per liter. At the same time, HSD prices went down by PKR 7.88 per liter.
In the previous review before that, authorities lowered petrol prices by PKR 2 per liter and diesel prices by PKR 2.50 per liter as global crude oil markets softened.
Global oil markets have remained under pressure in recent weeks. Analysts linked the trend to slower demand growth, better supply expectations, and uncertainty around economic recovery in major economies.
Brent crude prices have traded lower compared with earlier levels this year. In addition, refined fuel prices in the international market have also weakened. Market experts said lower freight costs and reduced premiums on imported fuels also supported the expected decline in local petroleum prices.
Industry officials noted that diesel prices saw a sharper fall because global high-speed diesel rates dropped by more than USD 17 per barrel during the review period.
The government will announce the final petroleum prices after reviewing recommendations from the Oil and Gas Regulatory Authority and other relevant ministries. Once approved, the revised prices will come into effect on May 29.
Analysts believe lower fuel prices could ease inflation and reduce transport costs across the country. However, they added that the government’s dependence on the petroleum levy under the International Monetary Fund program may restrict bigger cuts in the future.
