Facing escalating import costs from the US-Israeli war on Iran, the Pakistani government enlisted domestic oil refineries to absorb approximately Rs15 billion in monthly financial burdens, enabling petrol to be sold at Rs15 per litre cheaper than international market rates.
Prime Minister Blocks Retail Price Increase
Petroleum Minister Ali Pervaiz Malik announced at an Islamabad press conference that Prime Minister Shehbaz Sharif consulted directly with domestic oil refineries to prevent an impending Rs15 retail price increase. The intervention keeps local retail prices below global benchmarks while import logistics face severe disruptions.
Roughly 70% of the country’s petrol requirement relies on imports, while local refineries supply the remaining 30%. The federal cabinet approved a revised pricing mechanism on October 30 to manage volatility. Under this temporary 30-day formula, premiums, incidentals, and customs duty for local refineries are fixed at pre-war March 7 levels. Refineries surrender the difference between actual import costs and ex-refinery calculations to the petroleum levy account.
| Fuel Metric | Previous Peak | Post-Outbreak Baseline |
|---|---|---|
| High Speed Diesel | Rs520.35 (April 3) | Rs281.00 (Feb 28) |
| Petrol Price | Rs458.41 (April 3) | Rs266.00 (March) |
Regional Conflict Drives Fuel Import Premiums Upward
Regional conflict severely impacted fuel logistics, driving freight, insurance, and shipping expenses upward. Malik explained that petrol import premiums surged from $5 per barrel before the war to $20 per barrel, with subsequent Pakistan State Oil tenders climbing toward $25 to $30 per barrel.
Despite these pressures, Information Minister Attaullah Tarar emphasized that macroeconomic indicators remained relatively stable. Tarar highlighted the ongoing fuel subsidy scheme launched on September 13, noting that registration had surpassed 15 million unique users. The government allocated approximately Rs27 billion toward the initiative, providing weekly Rs500 concessions for motorcycle users and reduced rates for 800cc car owners.
Austerity Measures and Supply Coverage
Official vehicle fuel allocations were halved for a three-month duration. Fuel prices have been fixed on a daily basis since July to reflect international fluctuations.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
