People wait their turn to get fuel at a petrol station, in Karachi, Pakistan June 2, 2022. Picture taken June 2, 2022. — REUTERS
The federal government on Tuesday increased the price of petrol and high-speed diesel (HSD) by Rs5.58 and Rs4.18 per litre, respectively, for September 9.
According to a notification issued by the Petroleum Division, the price of petrol was fixed at Rs364.35 per litre, while HSD would cost Rs385.95 per litre for September 9.
The latest revision comes a day after the government hiked the price of petrol and HSD by Rs12.9 and Rs3.72 per litre, respectively, for September 8.
Read: Govt sharply hikes petrol price by Rs12.9, HSD by Rs3.72 per litre for Sept 8
On July 17, the government announced a new pricing mechanism under which petroleum product prices would be reviewed and notified on a daily basis, replacing the weekly pricing mechanism, as renewed tensions between the United States and Iran continued to drive volatility in global oil markets and raise concerns over fuel supplies.
According to the Pakistan Economic Survey 2024-25, petroleum products constitute one of the country’s largest import categories, making the economy highly vulnerable to changes in global crude oil prices. Domestic refineries satisfy only part of national demand, while the remainder is met through imports of crude oil and refined petroleum products. Consequently, every increase in international oil prices raises Pakistan’s import bill, pressures foreign exchange reserves, and contributes to inflation.
Pakistan previously exercised significant government control over petroleum pricing through subsidies and administrative interventions. While these measures temporarily protected consumers, they imposed substantial fiscal costs. During periods of elevated global oil prices, successive governments delayed passing price increases to consumers, creating financial pressures for oil marketing companies, refineries, and the national budget. Large fuel subsidies widened fiscal deficits, increased public borrowing, and weakened macroeconomic stability.
Global geopolitical developments continue to pose significant risks. International oil prices are influenced by decisions taken by OPEC+, conflicts in the Middle East, sanctions on oil-producing nations, and disruptions in critical shipping routes such as the Strait of Hormuz and the Red Sea. Any interruption in these supply chains can immediately increase crude oil prices and freight costs. Since Pakistan imports the majority of its petroleum requirements, these developments quickly translate into higher domestic fuel prices.
Oil prices rose to a six-week high on Tuesday after Iran-backed Houthis in Yemen attacked Saudi energy facilities, setting oil installations ablaze and threatening a major expansion of the six-month-old Middle East war.
Brent crude futures rose 70 cents, or 0.7%, to $97.70 a barrel at 10:56 am EDT (1456 GMT), while US West Texas Intermediate (WTI) crude rose $1.21, or 1.3%, to $92.69. That puts Brent on track for its highest close since July 23 and WTI on track for its highest close since June 4.
“The price action reflects both genuine physical tightness — tanker flows through Hormuz remain well below normal — and a clear geopolitical risk premium. Right now the risk premium is doing a lot of the heavy lifting,” said Tim Waterer, chief market analyst at KCM Trade.
