Falling crude oil prices after easing Middle East tensions raise hopes of lower petrol and diesel prices in the next fortnightly review

ISLAMABAD: Pakistani consumers are expecting a substantial reduction in petrol and diesel prices in the upcoming fortnightly fuel price review after international crude oil prices declined by nearly 14% following the easing of tensions between Iran and the United States.

The sharp fall in global oil prices has fuelled expectations that the government will pass on the benefit to consumers by lowering domestic petroleum prices in today’s announcement, provided international prices remain at current levels.

In the yesterday’s review, the government reduced the price of petrol by Re1 per litre to Rs334.20 per litre, while increasing the price of high-speed diesel (HSD) by Rs3.30 per litre to Rs386.80 per litre.

The relatively modest adjustment came despite declining international oil prices because Pakistan calculates domestic fuel prices using the seven-day average of global petroleum prices. Consequently, the latest revision did not fully capture the subsequent sharp decline in crude oil markets.

Over recent days, global crude oil prices have fallen to around $87 per barrel, down from nearly $101 per barrel, after geopolitical tensions in the Middle East eased following the halt in hostilities between Iran and the United States.

As a net importer of crude oil and refined petroleum products, Pakistan remains highly sensitive to fluctuations in international energy prices. Changes in global oil markets directly influence the country’s import bill, foreign exchange requirements and domestic fuel prices.

The latest decline in crude oil prices is expected to ease pressure on Pakistan’s economy by reducing the cost of petroleum imports and helping to contain inflation if the lower international prices are reflected in domestic fuel rates.

Lower petrol and diesel prices would also reduce transportation and logistics costs, providing relief to households and businesses while helping moderate the prices of essential goods and services across the economy.

Market analysts believe that if global crude oil prices remain near current levels, Pakistani consumers could benefit from a more meaningful reduction in fuel prices, offering welcome relief amid the continued high cost of living.