Friday September 29, 2023

Petrol prices to rise as oil surges, rupee gains may soften blow

September 14, 2023

KARACHI: Prices of petroleum products may see a significant increase in the next fortnight as global oil prices rise, though a recent strength in rupee value in the interbank market may weaken the price hike, industry officials said.

The Oil and Gas Regulatory Authority (OGRA) is expected to announce new prices for petrol, diesel and other petroleum products on September 15, based on the average international crude oil prices and exchange rate fluctuations in the first 15 days of September.

The petrol price may jump by Rs16 per litre in the next fortnight review of the petroleum prices, while the price of high speed diesel (HSD) is likely to go up by Rs13.66 per litre, industry estimates showed.

The ex-depot price of petrol has been calculated at Rs321.35 per litre for the next fortnight compared to its existing price of Rs305.36 per litre, showing an increase of Rs15.99, while the ex-depot price of HSD has been worked out at Rs325.50 per litre compared to its current price of Rs311.84 per litre, indicating an increase of Rs13.66 per litre.

The prices of kerosene and light diesel oil (LDO) are also expected to rise by Rs10.02 and Rs4.45 per litre respectively.

The increase in the ex-depot price has been mainly caused by the rupee depreciation as well as the increase in the international prices of petroleum products.

The oil industry has worked the ex-depot price of petroleum products for the next fortnight at the average exchange rate of Rs304.21 versus one dollar compared to Rs299.77 per dollar average exchange rate for the existing price of the petroleum products in the country.

Industry people, however, expect some reduction in the exchange rate as dollar fell in the interbank market and more fall in the remaining two days before the announcement of prices can provide some relief in the prices of petroleum products for the consumers.

However, they believed big relief can’t be expected for the consumers as the global prices of the petroleum products have also gone up, which would be negatively impacting the local consumers in the form of high prices of petroleum products.

“The rupee appreciation will have a positive impact on the petroleum prices, but it will not be enough to offset the impact of rising global oil prices,” said an industry official.

The government reviews and adjusts the petroleum prices every fortnight, based on OGRA’s recommendations. The final decision, however, rests with the finance ministry, which sometimes absorbs part of the increase to provide relief to consumers.

But the government has to raise fuel prices as agreed with the International Monetary Fund (IMF) under $3 billion standby agreement.