Karachi, September 13, 2023 – Pakistan is facing a challenging decision regarding the revision of petroleum prices for the second half of September 2023, particularly due to the recent surge in global oil prices.
The government is scheduled to review petroleum prices on September 15, 2023, with the new prices taking effect from September 16, 2023. This decision will be based on a consideration of exchange rates and global oil prices.
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In terms of exchange rates, the Pakistani Rupee (PKR) has shown signs of recovery against the US Dollar, thanks in part to a massive crackdown against currency smuggling and hoarding. On September 12, 2023, the PKR closed at PKR 299.89 to the Dollar in the interbank foreign exchange market, marking a recovery of PKR 5.65 compared to its closing rate of PKR 305.54 on August 31, 2023.
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However, the challenge arises from the surge in global oil prices since the start of September 2023. The benchmark Brent crude oil price reached $92.06 per barrel during trading on September 12, 2023, compared to $87.80 on September 1, 2023.
As a net importer of petroleum products, Pakistan heavily relies on these imports to meet its domestic energy needs. Despite the adverse impact of elevated petroleum costs on local demand, the country imported energy products worth $791 million in July 2023, compared to $1.44 billion in the same month the previous year. This import dependency places added pressure on the government to align price adjustments with global market fluctuations.
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In its previous revision, the government made the difficult decision to raise petroleum prices to record-high levels. With petrol reaching Rs 305.36 per liter and High-Speed Diesel (HSD) at Rs 313.84 per liter, prices reached historic peaks, causing concern among the Pakistani populace about the rising cost of fuel and its potential inflationary impact on the economy.
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Balancing these factors and making a decision that addresses both global market trends and the well-being of the local population will be a significant challenge for the government as it revises petroleum prices for the upcoming period.
