The Ministry of Energy (Petroleum Division) has officially revised the pricing mechanism for High-Speed Diesel (HSD). The government issued this directive on October 19, 2026. This urgent measure specifically aims to manage domestic fuel costs during the ongoing Iran-US war.
The Revised High-Speed Diesel Pricing Formula
The Federal Cabinet approved specific amendments to the previous HSD pricing mechanism, which was originally dated August 19, 2026. Firstly, authorities established a strict HSD crack ceiling of US$ 38.00 per barrel. Meanwhile, US$ 11.33 per barrel will serve as the absolute floor or lower limit for determining HSD prices.
Furthermore, the government will use a corresponding seven-working-day average crack. This moving average will dictate the maximum allowable crack up to the US$ 38.00 ceiling. Consequently, this revised crude-based pricing framework will remain active for a further period of three months. However, the government may reconsider this mechanism before that period expires if the geopolitical situation improves and international prices register a rapid decline.
All other parameters for pricing petroleum products will remain applicable as per existing practice. The Ministry has formally requested the Oil and Gas Regulatory Authority (OGRA) to take appropriate action for the immediate implementation of these decisions.
Navigating the Global Fuel Crisis
This critical policy update arrives amidst the largest disruption to the world energy supply since the 1970s. Earlier this year, the 2026 US-Israel war on Iran sparked a massive global fuel crisis. In late February, Iran blocked shipping traffic through the Strait of Hormuz. Previously, this vital maritime chokepoint handled roughly 25% of the world’s seaborne oil trade. In response, the United States enforced an extensive naval blockade on Iranian ports.
A temporary ceasefire briefly restored market hope in June. Unfortunately, the truce completely collapsed on July 8 following renewed strikes on commercial vessels. Subsequently, Iran closed the strait again. The US military subsequently launched consecutive rounds of airstrikes to force the shipping lanes open.
These relentless crossfires and blockades continue to strangle global oil shipments. Consequently, the Federal Government previously transitioned to a strategy of adjusting petrol and diesel prices daily. Effective July 17, 2026, OGRA started revising ex-depot prices every 24 hours. The government implemented that drastic shift to shield the local economy from extreme market volatility. Now, the newly implemented HSD crack ceilings provide an additional layer of targeted economic defense during these extraordinary times.
