Petrol prices have surged by Rs21.88 per litre in three days, while high-speed diesel has risen by Rs14.62 amid renewed global oil market volatility.
ISLAMABAD: Pakistan’s fuel shock has deepened after the government increased petrol prices by a cumulative Rs21.88 per litre and high-speed diesel (HSD) by Rs14.62 per litre over three consecutive days, as renewed volatility in global oil markets continues to drive up domestic fuel costs.
The government on Wednesday raised the price of petrol by Rs3.40 per litre and HSD by Rs6.72 per litre, with the revised rates taking effect from September 10.
Following the latest increase, petrol will cost Rs367.75 per litre, up from Rs364.35, while HSD has risen to Rs392.67 per litre from Rs385.95.
The Petroleum Division announced the revised prices through an official notification.
Daily fuel pricing introduced
The latest increase comes after the government shifted to a daily petroleum price review mechanism in response to sharp fluctuations in international oil prices.
Under the new system, the Oil and Gas Regulatory Authority (OGRA) will determine daily ex-depot prices for petrol and HSD based on the average international market price recorded over the preceding seven days.
Petroleum Minister Ali Pervaiz Malik said the seven-day average mechanism was aligned with international practice.
OGRA has also started publishing daily petroleum prices on its website to improve transparency and allow international oil price movements to be reflected in domestic fuel rates more quickly.
The regulator can announce daily prices without obtaining prior approval from the prime minister or federal government. However, prices notified on Fridays will remain unchanged on Saturday and Sunday.
Middle East tensions drive oil volatility
The sharp increases have come against the backdrop of renewed hostilities in the Middle East, which have fuelled concerns about disruptions to global energy supplies.
The government initially shifted from fortnightly to weekly fuel price reviews after the Middle East conflict began on February 28, when Israel and the United States attacked Iran and Tehran shut the Strait of Hormuz.
The strategic waterway had been a major transit route for around one-fifth of global energy supplies before the conflict.
Tensions have subsequently intensified following the collapse of a fragile June truce between Tehran and Washington, raising concerns about a wider conflict and further disruption to energy flows through the Strait.
OGRA given greater role
An official document outlining the federal cabinet-approved petroleum pricing framework states that OGRA will issue daily ex-depot prices for petrol and HSD.
The regulator will use average international market prices from the previous seven days to calculate the domestic rates.
The framework also requires OGRA to publish daily Platts reference prices, while the petroleum levy cannot exceed the limit approved by the federal cabinet.
Any change in the petroleum levy will require approval from the Finance Division.
Fuel import rules revised
The new mechanism also introduces changes to petroleum import arrangements for fiscal year 2026-27.
Imports of high-speed diesel will be routed exclusively through Pakistan State Oil (PSO), while oil marketing companies will be allowed to import petrol according to their respective market shares.
Companies that fail to meet their import or upliftment obligations may be barred from receiving fresh import permissions for up to nine months.
The government has also directed that kerosene oil and light diesel oil prices be determined daily and instructed the relevant authorities to implement the revised pricing mechanism immediately.
Higher fuel costs add to economic pressure
The latest increases are expected to place further pressure on transport and production costs as households and businesses continue to face elevated energy prices.
Higher petrol and diesel prices can feed into transportation, logistics and manufacturing expenses, potentially adding to broader inflationary pressures if international crude prices remain elevated.