Government Announces Sharp Increase in Petroleum Prices
The federal government has increased the price of petrol by Rs13.18 per litre and high-speed diesel (HSD) by Rs13.80 per litre, effective immediately, reversing the relief provided to consumers just a week earlier. The hike is attributed to a renewed surge in international crude oil prices triggered by escalating tensions between Iran and the United States.
Global Oil Price Spike Drives Domestic Adjustment
According to a notification issued by the Petroleum Division, the price of high-speed diesel has been raised from Rs309.50 to Rs323.30 per litre, while petrol now costs Rs310.71 per litre, up from Rs297.53. The increase follows a fresh spike in global oil prices after renewed US strikes on Iran and a breach of ceasefire agreements on July 7-8. Brent crude climbed to around $77-$78 per barrel, while US West Texas Intermediate (WTI) traded at $73.60 per barrel, prompting the government to pass on the higher import cost to domestic consumers.
Petroleum Levy Also Increased on Multiple Products
The government has also raised the petroleum levy on petrol from Rs70.36 to Rs80 per litre for retail outlets and from Rs79 to Rs88.64 for direct sales. The levy on premium HOBC/MS (95 RON) has been increased from Rs95.36 to Rs105 per litre for retail outlets and from Rs97.51 to Rs107.15 for direct sales. However, the petroleum levy on kerosene oil remains unchanged at Rs20.36 per litre, light diesel oil (LDO) continues at Rs15.84 per litre, and furnace oil levy stays at Rs77 per litre (equivalent to Rs82,077 per metric tonne).
Impact on Transport, Agriculture, and Consumers
High-speed diesel is widely consumed by the transport and agriculture sectors, and changes in its price have a significant impact on freight charges and inflation. Petrol is primarily used by motorcycles and passenger vehicles. Demand for petrol has also increased following restrictions on the use of indigenous gas in Punjab. Kerosene oil remains an important fuel in remote areas, particularly in the country's northern regions where liquefied petroleum gas (LPG) is not readily available for cooking. It is also a key fuel used by the Pakistan Army. Light diesel oil is mainly consumed by industry.
Oil Industry Sales Decline Amid Smuggling Concerns
Meanwhile, Pakistan's oil industry witnessed a significant decline of up to 20% in sales during June. Industry representatives attributed the drop largely to the growing smuggling of petroleum products from Iran. General sales tax (GST) on petroleum products remains zero, resulting in revenue losses for the provinces. Sindh has now taken up the issue of the federal government's reliance on the petroleum levy, arguing that, unlike GST, which is shared with the provinces, the levy is retained entirely by the federal government.
