The caretaker government in Pakistan is anticipated to increase the prices of petrol and high-speed diesel (HSD) in the upcoming fortnightly review on January 31. The expected hike is attributed to a surge in international oil rates amid escalating tensions in the Middle East. Industry officials pointed out that global prices of petroleum products have increased in the last week due to events in the region, including Houthi attacks on ships in the Red Sea and subsequent strikes by the US and UK against them in Yemen.
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Fortnightly Fuel Price Adjustment:
- The caretaker government in Pakistan adjusts fuel prices every 15 days based on the recommendations of the Oil and Gas Regulatory Authority (OGRA). The next review, scheduled for January 31, is expected to result in an increase in petrol and diesel prices.
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Potential Price Hike:
- Officials suggest that petrol and diesel prices could see an increase of Rs7 per litre each in the upcoming review. The expected hike follows a period of relative stability or reduction in domestic fuel prices since November 01, 2023.
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Global Oil Market Dynamics:
- The surge in international oil rates is linked to recent events in the Middle East, particularly Houthi attacks in the Red Sea and subsequent military actions by the US and UK in Yemen. These developments have contributed to an increase in global prices of high-speed diesel, petrol, and crude oil.
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Fluctuations in Global Prices:
- Over the past week, global prices have witnessed fluctuations, with petrol rising from $83 to $89 per barrel, HSD increasing to $97-98 per barrel from $93, and crude oil prices rising from $76 to $80 per barrel.
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Market Resistance and Stability:
- Officials note that there has been some resistance in global prices, and the stability of the local currency has helped control price fluctuations in the domestic market. However, they caution that prices may remain elevated in the coming days.
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Impact of International Events:
- The geopolitical events in the Middle East, especially those affecting oil transportation routes and supply chains, have had a direct impact on global oil prices. The situation underscores the interconnectedness of international events and their influence on domestic fuel prices.
The expected fuel price hike in Pakistan is driven by global oil market tensions arising from recent geopolitical developments. The caretaker government’s fortnightly review will provide insights into the adjustment of fuel prices based on international dynamics and their impact on the domestic market.
