Fuel prices in Pakistan are expected to increase moderately from July 1, driven by a surge in international oil rates, but could decline again mid-month if global prices continue to ease.
According to a fuel pricing outlook compiled by Arif Habib Limited (AHL), the average international price of Gas Oil (diesel) rose by 10.3% to $87.18 per barrel between June 16 and June 30, compared to $79.05 in the first half of June. Gasoline (petrol) prices rose 5.8% to $78.42 per barrel during the same period.
This increase follows heightened geopolitical tensions between Israel and Iran earlier in the month. Prices of WTI, Brent, and Arablight crude rose 5.2%, 6.9%, and 7.0%, respectively, during the second half of June.
However, a ceasefire on June 24 brought some relief in global markets, with diesel and petrol prices subsequently dipping 0.6% and 6.6%.
Despite the fluctuation, the Pakistani rupee appreciated slightly during this period, moving from 282.41 to 283.63 against the dollar.
According to AHL, overall domestic diesel prices are expected to rise by Rs18.06 litre to Rs280.65, and petrol by Rs13.86 litre to Rs272.29 from July 1.
However, if the declining trend in international market persists, domestic rates could fall again in the next fortnightly review on July 15. Forecasts indicate potential reductions of Rs13.47 per litre for diesel and Rs5.89 litre for petrol in the July 16–31 pricing period.
The brokerage house forecasts that the government may offset the immediate impact on consumers by temporarily lowering the petroleum development levy (PDL). This would allow a moderate increase of around Rs4.5 litre for diesel and Rs8 litre for petrol from July 1, with full levy restoration expected once prices stabilise.
“To smoothen price volatility, we believe the Govt may temporarily reduce the Petroleum Levy (PL), limiting the upcoming hike (effective July 1) to just PKR 4.5 per litre and PKR 8 per litre, before restoring the PL when prices ease in the next review,” read AHL’s note.
Earlier, the federal government announced the imposition of a Rs77 per litre petroleum levy and a Rs5 per litre carbon levy on furnace oil, along with a Rs2.5 per litre charge on petrol and diesel, effective from July 1.
On June 16, the Finance Division notified price hike for both petrol and diesel, raising the rates by Rs4.80 and Rs7.95 per litre, respectively. The price of high-speed diesel (HSD) stands at Rs262.59 per litre, while petrol is priced at Rs258.43 per litre.
