Karachi, November 13, 2023 – The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has projected that the country could witness a reduction of up to Rs 20 per liter in petroleum prices starting from November 16.
FPCCI President Irfan Iqbal Sheikh emphasized that international oil prices, currently at $81.30 per barrel, exhibit a declining trend, providing an opportunity for Pakistan to mitigate inflationary pressures.
Sheikh asserted that despite the ongoing conflict and supply cuts announced by major oil-producing nations such as Saudi Arabia and Russia until December 2023, the international oil market is witnessing a bearish outlook. He anticipates that these oil-producing countries will continue their production cuts beyond December 2023.
Highlighting the economic indicators, Sheikh explained that the global oil demand outlook is bleak, with both the U.S. and China experiencing a drop in demand. U.S. reserves have increased by 11.9 million barrels, contributing to the downward pressure on oil prices. The conflicts between Russia & Ukraine and Israel – Palestine are cited as principal factors contributing to the unfavorable economic scenario on a global scale.
In light of these developments, FPCCI President Irfan Iqbal Sheikh urged the federal government to take immediate action and announce a reduction of 18 – 20 rupees per liter in petroleum prices. He emphasized that, in the short term, adjusting petroleum prices is a crucial measure for the government to alleviate inflationary pressures, particularly in the ongoing International Monetary Fund (IMF) Stand-By Arrangement (SBA) review.
Sheikh proposed that the policy rate of the State Bank of Pakistan (SBP) should be revised downward from 22 percent to 20 percent, considering the core inflation at 18.50 percent recorded for November 2023. He clarified that prices of essential commodities like food and petroleum should not be directly linked to the policy rate, and adjustments should be based on core inflation.
To enhance oversight and management of key commodity prices, Sheikh recommended the establishment of an essential commodities price oversight mechanism. This mechanism, developed in consultation and collaboration with the private sector, aims to efficiently address the persistent downward trend in global commodity prices.
Muhammad Suleman Chawla, Senior Vice President of FPCCI, underscored the urgency for the government to provide relief to the business community. He emphasized that Pakistan’s competitiveness has been severely impacted by successive increases in electricity, gas, and petroleum prices over the past year. Chawla urged the government to consider measures that alleviate the cost of production for exporters without compromising fiscal targets.
As FPCCI presses for a reduction in petroleum prices, the government faces the challenge of balancing economic stability with the imperative to address inflation and support the business community. The outcome of these deliberations will play a crucial role in shaping Pakistan’s economic landscape in the coming months.
