Government Set to Raise Petroleum Prices from March 1, Adding to Inflationary Pressures

By Shahzad Paracha :

Inflation-weary Pakistani citizens face yet another financial blow as the government prepares to increase petroleum product prices from March 1, with the Oil and Gas Regulatory Authority completing its calculations for the fortnightly review.

Government sources indicate that petrol prices are expected to rise by Rs4.58 per litre, while high-speed diesel may increase by Rs4.73 per litre. The most significant hike is projected for kerosene oil, which could become more expensive by Rs6.88 per litre, followed by light diesel oil with a potential increase of Rs5 per litre .

The price revision follows standard procedure, with OGRA scheduled to forward its recommendations to the Petroleum Division on Saturday. After receiving formal approval from Prime Minister Shehbaz Sharif, the Petroleum Division will issue a notification implementing the new rates, which will remain effective from March 1 to March 15 .

Differing Estimates

While government sources cite the figures above, brokerage house Arif Habib Limited has projected somewhat higher increases based on global market trends. Their analysis suggests petrol could rise by Rs5.13 per litre, potentially reaching Rs263.30, while high-speed diesel may increase by Rs6.80 per litre, pushing its price to approximately Rs282.50 .

The discrepancy reflects different calculation methodologies, though both estimates point to an upward trend.

Global Factors Driving Local Prices

The anticipated hike is primarily attributed to rising crude oil prices in international markets. Arab Light crude prices have increased by 2.7 percent, while import spreads have also slightly widened, contributing to the overall increase in domestic fuel costs .

Geopolitical tensions have added to market uncertainty. Oil prices rose approximately 3 percent in recent days as traders remained alert to potential supply disruptions following US-Iran nuclear talks in Geneva. Brent crude futures advanced to around $72.84 per barrel, while US West Texas Intermediate climbed to $67.54 .

Context of Rising Prices

This marks the second consecutive increase in petroleum prices. In the previous fortnightly review on February 15, the government raised petrol by Rs5 per litre and high-speed diesel by Rs7.32 per litre. Currently, petrol stands at Rs258.17 per litre, while diesel is priced at Rs275.70 per litre .

Officials maintain that fuel prices in Pakistan are reviewed on a fortnightly basis to strike a balance between consumer relief and fiscal requirements. The proposed revision was formulated after reviewing international price trends, domestic fuel consumption patterns, and overall market conditions over the past two weeks .

For ordinary Pakistanis already grappling with 30 consecutive weeks of rising inflation, the latest increase threatens to further strain household budgets already stretched thin by escalating food and energy costs .