The federal government on Thursday continued its daily increase of the prices of fuel productions, with petrol and high-speed diesel spiking by Rs. 4.40/liter and Rs. 3.62/liter, respectively, as global rates continue to soar amidst mounting hostilities between Iran and the United States.
According to the Petroleum Division’s notification, consumers would now pay Rs. 331.52/liter for petrol and Rs. 378.66/liter for diesel. From this rate, the government is collecting Rs. 110/liter in taxes and duties on petrol, and Rs. 96/liter on diesel. The notification said the new prices would remain applicable for July 24 (Friday).
Since the government shifted to the daily price fixation mechanism last week, the price of diesel has surged from Rs. 354.35/liter to Rs. 378.66/liter, an increase of Rs. 24.31/liter. Similarly, the price of petrol has increased from Rs. 316.15/liter to Rs. 331.52/liter, a difference of Rs. 15.37/liter.
Announcing the new mechanism, Petroleum Minister Ali Pervaiz Malik had said the decision aimed to pass onto consumers the full impact of global market fluctuations amidst supply disruptions caused by the Middle East conflict. It is based on a seven-day weekly average of international market prices.
This is the second time the government has shifted its pricing mechanism due to the conflict; in March it had shifted from a fortnightly to a weekly review.
The All Pakistan Dealers Association had rejected the new mechanism over its impact on their profit margins and had threatened a strike this week. However, they announced a two-week deferral after talks with the government, claiming they had been assured their concerns would be addressed.
Primarily used in private transport, small vehicles, rickshaws and two-wheelers, changes to the price of petrol tend to affect the middle and lower-middle classes who use it for their daily commutes. Diesel, meanwhile, is considered an inflationary fuel, as it is mostly used in the transport sector, power plants and large generators.
Global surge
Brent crude soared over $100/barrel on Thursday for the first time since May, as the latest round of hostilities between Iran and the U.S. shows no signs of abating, with Iran-backed Houthi militias also threatening Saudi Arabia and its alternative route through the Red Sea.
Analysts fear a prolonged conflict could have devastating effects on the global economy, as reserves have already partially drawn down and countries that had not availed limited supplies earlier this year are now also seeking fresh purchases.
Earlier this month, the International Energy Agency had warned that world production was below pre-war levels by around 9.4 million barrels a day, roughly 10 percent of global consumption. It reaffirmed the threat this week, though noted there was some relief in the oil from Saudi Arabia and the United Arab Emirates reaching markets by alternative routes.