The recent increase in petroleum product prices in Pakistan has been attributed to multiple factors, including taxes and Oil Marketing Companies’ (OMCs) margins, which collectively account for 68% of the ex-depot prices. Effective December 1, 2024, petrol prices rose by Rs 3.72 per litre to Rs 252.10, while High-Speed Diesel (HSD) saw a hike of Rs 3.29, now costing Rs 258.43 per litre.
Global oil market trends played a role in shaping these adjustments. Brent crude settled slightly higher at $72.83 per barrel, while US West Texas Intermediate crude saw a minor decline to $68.72 per barrel during the trading period of November 16–29.
Domestically, the ex-refinery price for petrol for the fortnight ending December 15 increased by Rs 1.97, moving from Rs 164.86 to Rs 166.83 per litre. For HSD, the rise was minimal, with an increase of just 7 paisa, bringing the price to Rs 176.76 per litre.
The majority of the price escalation, however, is linked to factors such as exchange rate volatility, the Inland Freight Equalization Margin (IFEM), and dealer margins. These variables, combined with OMC margins, heavily influence the overall pricing mechanism.
Despite these increases, the Petroleum Levy (PL) remains unchanged at Rs 60 per litre for both petrol and HSD, a rate that has been in place since September 1, 2023. Furthermore, petroleum products have been exempt from General Sales Tax (GST) since February 2022, providing some relief to consumers by mitigating additional price burdens from indirect taxes.
The adjustments reflect the government’s ongoing struggle to balance domestic energy costs with global market dynamics and fiscal pressures. While Brent and WTI benchmarks showed limited fluctuations during the assessed period, the interplay of local operational costs and currency exchange rates remains a significant challenge in determining retail prices.
Analysts predict that future price movements will depend heavily on exchange rate stability and international crude oil trends. Both businesses and consumers are advised to monitor these developments closely as the fortnight progresses, with potential implications for economic stability and household budgets.