Domestic prices of petroleum products will come down sharply in the next fortnightly review of prices
KARACHI: The domestic prices of petroleum products will come down sharply in the next fortnightly review of prices, expected by the oil industry and analysts, providing much needed relief to the inflation-hit masses.
The oil sector and analysts differed on the magnitude of the cut in the petroleum prices, but agreed that it would be significant, which would ease the inflationary pressure on the public. The expected cut in the prices of petroleum products is attributed to the decline in international oil prices during the last week amid demand concerns. The prices of West Texas Intermediate, Brent and Arab Light crude oil dropped by 9 to 11 percent as compared to the last fortnightly average prices, according to Arif Habib Brokerage house.
Pakistan imports crude oil from Gulf nations and the average crude price in this market is $86 per barrel. The international gasoline price plummeted by 15 percent to $84.3 per barrel compared with the last fortnightly average of $99.3 per barrel. “This is for the first time in the last several months that international price of gasoline has gone down even below the price of crude oil which is presently $86 per barrel,” a chief executive of an oil company said.
Similarly, the international price of high speed diesel took a dip of 10 percent to $110.6 per barrel compared with the last fortnightly average of $122.3 per barrel. An official of an oil firm said that high speed diesel price did not come down massively in the international market, so its domestic price is not coming down sharply compared to gasoline. Furthermore, the local currency has appreciated 2.7 percent to 283.87 against one dollar compared to the last fortnightly average of 291.65.
In view of rupee appreciation and decline in international prices and currency remain at the same level for the next 10 days, the local gasoline and diesel prices are expected to go down by Rs 41 per liter and Rs 19 per liter respectively in the next fortnightly prices effective from Oct. 16, Arif Habib Limited report said. The oil sector, on the other hand, expects Rs 35 per liter cut in the price of gasoline and Rs 10 per liter cut in the price of high speed diesel in the next review.
However, the exchange rate adjustment may not pass on the full benefit of the cut in the global prices of oil as the arrears of the past may be adjusted this time. The exchange rate adjustment in the last fortnightly prices of gasoline and high speed diesel was Rs 11.9 per liter and Rs 2.8 per liter respectively. “The exchange rate for Pakistan State Oil may be on the positive side in the next review after remaining negative for the last several months,” oil sector people believed.