Fuel hike raises questions over Rs113 billion windfall gains for oil companies: report

Rs55 per litre increase in fuel prices has triggered debate over potential inventory gains of about Rs113 billion for oil marketing companies (OMCs), though officials and industry representatives say the pricing mechanism reflects global market changes, Business Recorder reported. 

Officials from the Petroleum Division said the domestic fuel price adjustment is based on the Platts benchmark average for petrol and high-speed diesel (HSD) during the pricing period, along with exchange rate movements, rather than the cost of earlier fuel shipments.

They explained that the pricing formula requires oil companies to replenish fuel stocks at current international prices.

Under OGRA regulations, oil marketing companies must maintain around 20 days of mandatory fuel stocks, which has recently increased due to regional tensions. As a result, companies continuously sell fuel while importing new cargo to maintain required reserves.

Officials said a litre of fuel sold today must be replaced with fuel purchased at the prevailing global price to maintain stock levels.

Amid regional uncertainties, Pakistan State Oil (PSO) has issued two import tenders each for petrol and diesel outside the Strait of Hormuz as a precautionary measure.

Petroleum Minister Ali Pervaiz Malik said earlier that three oil shipments are expected to arrive in Pakistan in the coming days.

According to officials, Pakistan currently holds over 500,000 tonnes of petrol and diesel stocks, providing about 26 days of petrol cover and 25 days of diesel cover.

The government has also approached Saudi Arabia to facilitate potential oil shipments through the Red Sea route as an alternative supply channel.

Fuel prices announced on March 1, 2026, were based on a Platts fortnightly average of $78 per barrel, while by March 6 the Platts benchmark had risen to $106 per barrel, prompting the Rs55 per litre increase.

Industry representatives said oil marketing companies were profitable when crude prices remained around $78 per barrel, but the rise to $106 per barrel required a significant adjustment in retail prices.

They said that without a price increase, companies could incur losses depending on inventory levels and replacement costs.

Global oil markets have been volatile amid the ongoing conflict in West Asia. Brent crude briefly crossed $100 per barrel on Monday and surged to nearly $120 per barrel, its highest level in about 45 months, before settling around $102 by the end of trading.

Industry representatives also pointed out that companies have previously faced inventory losses when fuel prices declined.

In December 2025, petrol prices were reduced by about Rs24 per litre following a fall in international prices, forcing refineries and oil companies to sell higher-cost inventory at lower market prices.

Similar inventory losses were recorded during price cuts in 2022 and 2023, when companies sold fuel purchased at higher global prices after domestic retail prices were reduced.