The revised mechanism links imported petrol prices to actual PSO cargo costs and temporarily freezes key pricing components for local refineries to provide relief to consumers.
Pakistan has introduced a revised petroleum pricing formula effective November 2, 2026, changing how imported and locally refined petrol prices are determined amid volatility triggered by the Iran-US war.
The federal cabinet approved the new mechanism on October 30, according to Petroleum Division documents cited by Geo News. The changes apply specifically to Motor Spirit (MS), commonly known as petrol, while other parameters for petroleum product pricing will remain unchanged.
Under the revised formula, imported petrol prices will be calculated using the actual import cost of the relevant Pakistan State Oil (PSO) cargo. If the actual cost is unavailable for daily pricing, the premium, incidental expenses and customs duty of the last available cargo will be used.
The government has also introduced a temporary 30-day mechanism for local refineries. During this period, the premium, incidentals and customs duty used to calculate petrol’s ex-refinery price will remain fixed at their March 7, 2026 levels, before the Iran-US war.
Consequently, the ex-refinery price is expected to remain below the import price. Refineries will be required to deposit the difference under the petroleum levy account.
They must also report daily domestic petrol sales and submit deposit records to the Petroleum Division and Oil and Gas Regulatory Authority (Ogra) for verification.
The government has stated that the resulting benefit will be passed on to consumers through a corresponding reduction in petrol prices.
However, the existing petroleum levy of Rs80 per litre will remain unchanged and is separate from the new pricing adjustment.
The Petroleum Division has also incorporated a premium differential benefit of $2.950 per barrel per day into petrol pricing to help smooth price movements.
The revised arrangement follows Pakistan’s introduction of a daily fuel pricing framework, under which Ogra calculates and publishes ex-depot petroleum prices.