Fuel prices expected to be decreased by up to Rs 13.40/litre from May 16

ISLAMABAD: The burden of inflation on the general public is expected to lighten with the anticipated reduction in oil prices up to Rs 13.40 per litre during the latter half of May 2024.

According to sources, petrol is expected to see a cut of Rs 13.40 per litre, and high-speed diesel (HSD) could witness a decrease of Rs 8.19 per litre. At the same time, the price of Light Diesel Oil (LDO) may be reduced by Rs 6.54 per litre and kerosene oil may witness a decrease of Rs 89.49 per litre.

They said these estimates are based on the current tax structure and, if approved, would mean that consumers could be paying Rs 275.09 per litre for petrol, Rs 273.77per litre for HSD, Rs 173.85 per litre for kerosene oil, and Rs 164.12 per litre for LDO. 

These proposed changes in petrol, diesel, and kerosene oil prices are calculated based on current government taxes, they added.

It is also learnt from the sources that this reduction in prices for the second half of May 2024 is calculated with a negative Rs 0.12 per litre exchange adjustment, while the petrol looks at $10.30/bbl (a barrel of crude oil), HSD premium $6.50/bbl (no change) and Platts remaining three days.  

At present, petrol is available at Rs 288.49/litre, HSD at Rs 281.96/litre, Kerosene oil at Rs 183.34/litre and LDO at Rs 170.66/litre in Pakistan.

As per sources, these proposed changes are subject to government approval and will depend on various factors, including global oil prices, currency exchange rates, and the financial implications for the energy sector.

This would be the second relief in a row if the government grants its approval for an estimated cut in the prices of all petroleum products. 

In a related development, oil prices continued to fall in the global market with the start of this week, influenced by signs of declining fuel demand and comments from US Federal Reserve officials that tempered expectations for interest rate cuts. 

This economic scenario could potentially reduce energy consumption in the US, the world’s largest economy. Brent crude futures were at $82.72 a barrel, while US West Texas Intermediate crude futures stood at $78.21 a barrel.

Despite these challenges, market optimism persists, supported by expectations that the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, might extend their supply cuts into the latter half of the year.

From May 1, 2024, the authorities reduced the petrol price by Rs5.45 per litre to Rs288.49 per litre from Rs293.94 per litre. Similarly, the diesel (HSD) price was also reduced by Rs8.42 per litre to Rs281.96 from Rs290.38 per litre. 

Petrol is primarily used as fuel for cars, motorcycles, and other vehicles.

High-Speed Diesel (HSD) is mainly used as fuel for heavy vehicles like trucks, buses, and industrial machinery. It is also used in generators and some agricultural equipment.

Kerosene Oil is used for cooking and lighting in households without access to electricity.

Light Diesel Oil is used in industrial boilers, furnaces, and certain types of engines. It’s commonly utilised in sectors like textiles, cement, and power generation.

It is pertinent to mention that the estimated cut in POL prices would further help decrease inflation in the country which is already on the decline and as a result of this significant cut in oil prices the inflation-hit masses will find relief.