Petrol Prices in Pakistan – MS petrol and High-Speed Diesel (HSD) prices are expected to rise sharply next week due to ongoing tensions in the Red Sea, which impacted crude supplies in Europe and the Middle East.
Pakistan is likely to raise the prices of petrol and diesel by Rs. 7 per liter each on January 31, 2024. If this happens, it will be the first increase in four months. The expected hike is due to the recent international price increases of High-Speed Diesel (HSD), petrol, and crude oil, which have gone up by $4-5 in just one week.
The international price of petrol has increased to around $89 per barrel from $83 per barrel, while the price of HSD has hit $97-98 per barrel from $93 per barrel in just one week. This surge will likely translate into higher market prices at home next week. Notably, the Rupee/$ rate in the local market is stable at 279 which has kept even bigger fluctuations under control.
On January 15, 2024, the temporary federal government lowered the cost of petrol by Rs. 8 per liter to Rs. 259.34. The price for high-speed diesel stayed the same at Rs. 276.21 per liter. The prices of petrol in Pakistan are mainly influenced by global prices and the exchange rate. But a big part of the current prices comes from the petroleum development levy, with the government currently adding Rs. 60 on each liter of both petrol and high-speed diesel.
Worldwide, the market for Brent crude oil futures and other physical markets in the Middle East, Europe, and Africa are showing limited supply. This is happening because of shipping delays in the region, particularly as tankers avoid the Red Sea. This problem, along with increased demand from China, is making it tougher for countries like Pakistan to get enough fuel unless the issues calm down.
The way Brent prices its oil, affecting about 80 percent of global oil trade, reached a two-month peak last Friday. This happened because ships changed their routes in the Red Sea after the United States and the United Kingdom conducted airstrikes on Yemen. The strikes were in response to Israel’s actions in Gaza, and, as a result, Yemen’s Houthis began targeting ships heading to Israel in the Red Sea last year.
The Houthis want Tel Aviv to end the war and allow humanitarian aid into the Gaza Strip.
