Fuel Prices Likely to Decline Sharply from December 16

Fuel prices in Pakistan are expected to move in opposite directions from December 16, with high speed diesel likely to drop sharply by Rs13.69 per litre, while petrol may increase by Rs1.43 per litre, according to estimates by Arif Habib Limited.

Analysts said the expected reduction in diesel prices follows a sharp fall in international oil rates and the normalisation of domestic price spreads. Data compiled by Arif Habib Limited shows the average international gas oil price declined by 7.8 percent to $81.40 per barrel in the first half of December, compared to $88.27 in the previous period.

The rupee remained largely stable during the same period, averaging 280.59 against the US dollar, limiting exchange rate pressure on domestic fuel prices.

Market analysts noted that despite the sharp drop in ex-refinery diesel prices, the government may opt to adjust the petroleum levy on high-speed diesel to support revenue targets for fiscal year 2026. Such a move could partially offset the impact of lower global oil prices on consumer rates.

In contrast to diesel, petrol prices are projected to rise slightly. The average international gasoline price edged down to $75.20 per barrel, yet domestic petrol prices are expected to increase from Rs263.45 to Rs264.87 per litre due to pricing adjustments and margin considerations.

An industry source said,

“The diesel price cut is expected to provide relief to transport and agriculture sectors, while the marginal petrol increase will have a limited impact on consumers.”

Analysts also noted that oil marketing company margins may be increased by Rs0.61 per litre in the upcoming fortnight, subject to approval by the Economic Coordination Committee, which could influence final consumer prices.