Govt may absorb up to Rs49/litre fuel hike as global oil prices surge amid Gulf tensions

The Pakistan government is expected to absorb an increase of up to Rs49 per litre in fuel prices following a sharp surge in global oil markets driven by tensions in the Gulf region, The Express Tribune reported, citing official calculations and industry estimates.

Based on international price movements, the price of high-speed diesel has increased by around Rs49 per litre, while petrol prices have risen by approximately Rs29 per litre. However, the government is considering offsetting the impact through price differential claims to keep domestic prices unchanged.

To absorb the recent increase in international prices, the government has allocated Rs23 billion for a one-week period from March 14 to March 20. Under this arrangement, a subsidy of Rs49.63 per litre on petrol and Rs75.05 per litre on high-speed diesel will be provided.

The subsidy will be paid to oil marketing companies in the form of price differential claims to cover the gap between global market prices and domestic retail rates.

The Ministry of Energy stated that the Oil and Gas Regulatory Authority (OGRA) will handle the disbursement of the Rs23 billion and implement a verification and audit mechanism for invoices submitted by oil marketing companies before clearing claims.

Usama Qureshi, Vice Chairman of Cynergy Group, said in a statement that the oil market has seen a sharp acceleration, with Dubai crude reaching $166.6 per barrel, up by over $11.20 in a single day. He added that diesel prices stood at $218.79 per barrel, increasing by more than $25.71, while gasoline rose to $145.87 per barrel, up by over $11.67. He noted that the rally is intensifying and placing pressure on importing countries such as Pakistan.

In the previous pricing decision, the federal government increased the prices of kerosene oil and light diesel oil (LDO) while keeping petrol and high-speed diesel prices unchanged by maintaining the petroleum levy and providing subsidies.

According to the Ministry of Energy (Petroleum Division), the price of kerosene oil was increased by Rs39.20 per litre to Rs358.01 per litre. The price of light diesel oil was raised by Rs67.51 per litre to Rs302.52 per litre, compared to the previous rate of Rs235.01.

At the same time, the government maintained the petroleum levy on petrol at Rs105.37 per litre and on diesel at Rs55.24 per litre.