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Thursday July 18, 2024

Relief in petrol, diesel prices on the cards

The international oil prices are on the decline after the Israel-Iran limited war is over

By Khalid Mustafa
June 14, 2024
A representational image of a fuel station staffer updating the fuel prices in Karachi. — AFP/ File
A representational image of a fuel station staffer updating the fuel prices in Karachi. — AFP/ File

ISLAMABAD: After presenting a heavily tax-loaded budget in the National Assembly, the government is set to benefit further from the oil price slump in the international market and is likely to reduce the price of petrol by Rs9.28 to Rs259.08 per litre from the existing Rs268.36 per litre and of high speed diesel (HSD) by Rs4.02 per litre to Rs266.20 from Rs270.22 per litre from June 16 for the next fortnight. This would be the fourth relief in the POL prices in a row from May 1.

The international oil prices are on the decline after the Israel-Iran limited war is over and now, there has been a slump in attacks from Houthis on the ships in the Red Sea. More importantly, the price of diesel in the international market has declined to $90 per barrel and petrol to $84 per barrel. However, the premium on petrol is at $9.590 per barrel and on high-speed diesel at $6.50 per barrel.

However, from mid of June to end July, most of the people in Europe often go on holidays using their vehicles, which is why the consumption of POL products in Europe will enhance in the days to come, which may cause a hike in the petroleum products’ prices in the international market.

This is the main reason rhe government is likely to provide a relief of Rs9.28 per litre in petrol and Rs4.02 per litre in the diesel prices. According to the working based on the data available till June 13, 2024 with two days left in ending the ongoing fortnight, the government may reduce the price of kerosene by Rs2 per litre to its new price of Rs169.61 and Light Diesel Oil (LDO) by Rs4.07 per litre to Rs153.25 per litre.

The expected POL prices have been calculated based on the current government taxes and with zero dollar exchange adjustment. At present, the Internal Freight Equalization Margin (IFEM) on Mogas (petrol) stands at Rs7.83 per litre and Rs3.73 per litre on HSD. The expected ex-refinery price of petrol is likely to be adjusted downward at Rs175.07 per litre from Rs184.02 per litre and diesel at Rs185.69 from Rs189.71 per litre.