Govt’s petroleum levy target at risk as global oil prices rise amid Middle East tensions

The Pakistan government may face a shortfall in its Rs1.4 trillion petroleum levy target for FY2025-26 as global oil prices climb amid concerns over possible US military action against Iran.

In the first half of the fiscal year (July–December), the government collected Rs850 billion, or 57% of the annual petroleum levy target.

International crude prices have moved upward in recent weeks. Brent crude increased 3.2% from $68.18 to $70.37 per barrel, Arab Light rose 2.7% from $67.39 to $69.18 per barrel, and WTI gained 2.3% from $63.64 to $65.07 per barrel.

According to brokerage estimates, petroleum product prices may increase from March 1, subject to government approval. The Oil and Gas Regulatory Authority is expected to forward its recommendations to the Petroleum Division, after which the prime minister will make the final decision.

The government has maintained the petroleum levy at Rs84.40 per litre on petrol and Rs76.21 per litre on HSD for the current fortnight ending February 28. In addition, a climate support levy of Rs2.50 per litre is being charged.