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Pakistan Braces for Sharp Rise in Petrol and Diesel Prices

As Pakistan anticipates a significant surge in petrol and diesel prices, the international oil market remains relatively indifferent to recent geopolitical tensions. Despite the neutral reaction to the surprise Iran strike on Israel last week, the new federal government is expected to implement substantial price hikes, impacting consumers nationwide.

Pakistan Braces for Sharp Rise in Petrol and Diesel Prices

Effective April 15, 2024, the government is poised to increase petrol prices by Rs. 2.5 per liter and diesel prices by Rs. 8.5 per liter. Should the burden of these hikes be passed on to the public, it would mark the second consecutive increase during the coalition government’s tenure.

The forecast for these price hikes stems from the notable spikes observed in international prices for High-Speed Diesel (HSD), petrol, and crude oil, particularly in the first week of April. Despite the stability of the Pakistani rupee, hovering between 278 and 279, the surge in global oil prices is expected to impact local rates significantly.

During the first week of April, international prices for petrol and HSD surged by approximately $4 and $4.50 per barrel, respectively. These increases are projected to propel petrol rates to Rs. 291.91 per liter and HSD rates to Rs. 294.06 per liter within Pakistan.

Interestingly, while HSD prices experienced a surge in the international market, the import premium paid by Pakistan State Oil remained steady at $6.50 per barrel. This discrepancy highlights the complex dynamics influencing domestic fuel pricing.

Globally, the Brent crude futures market and other physical markets across the Middle East, Europe, and Africa are reflecting tighter supply conditions, with prices ranging between $80-90 per barrel. Contributing factors include shipping delays in the region over recent months.

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As Pakistan braces for these imminent price hikes, consumers and businesses alike are preparing for the economic ramifications of increased fuel costs, underscoring the interconnectedness of global events and local economies.

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