Karachi, September 14, 2023 – Pakistan is facing a difficult decision regarding the revision of petrol and diesel prices, set to take effect from September 16, 2023. The government’s deliberations on petroleum prices are influenced by a recent spike in global oil prices, adding complexity to the already challenging task.
The government is scheduled to conduct a comprehensive review of petroleum prices on September 15, 2023. This review is critical, as it will determine the new rates that will be in effect for the second half of September. The decision-making process will be heavily reliant on factors such as exchange rates and the prevailing global oil market conditions.
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Notably, the Pakistani Rupee (PKR) has displayed signs of recovery against the US Dollar. This recovery can be attributed, in part, to a vigorous crackdown against currency smuggling and hoarding. As of September 12, 2023, the PKR stood at PKR 299.89 against the US Dollar in the interbank foreign exchange market, marking a significant improvement of PKR 5.65 compared to its closing rate of PKR 305.54 on August 31, 2023.
However, the challenge at hand stems from the surge in global oil prices witnessed since the start of September 2023. The benchmark Brent crude oil price surged to $92.06 per barrel during trading on September 12, 2023, compared to a more modest $87.80 per barrel on September 1, 2023.
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As a net importer of petroleum products, Pakistan heavily relies on these imports to satisfy its domestic energy requirements. Despite the adverse implications of elevated petroleum costs on local demand, Pakistan imported energy products worth $791 million in July 2023, a noticeable decrease from the $1.44 billion spent in the same month the previous year. This import dependency places added pressure on the government to make judicious price adjustments in response to fluctuations in the global oil market.
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In the previous price revision, the government faced the tough decision of increasing petroleum prices to record-high levels. The cost of petrol soared to Rs 305.36 per liter, while High-Speed Diesel (HSD) reached an all-time high of Rs 313.84 per liter. These historic price levels sparked concerns among the Pakistani populace about the escalating cost of fuel and its potential inflationary repercussions on the economy.
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Balancing the intricacies of global market trends and safeguarding the well-being of the local population poses a substantial challenge for the government as it contemplates the upcoming adjustment of petroleum prices. The decision, set to be unveiled on September 15, 2023, will have a significant impact on Pakistan’s economy and the daily lives of its citizens.
