Petroleum products prices likely to hike Rs6-7/litre

KARACHI: The prices of domestic petroleum products are likely to surge by Rs6-7/litre after the international crude prices hit seven year high following the invasion of Ukraine by Russian troops early on Thursday morning.

According to the local oil sector, Pakistan depends more than eighty percent on the import of crude and refined petroleum products. Massive increase in the global oil prices has pushed the country in a vulnerable situation that might bring further price hike in oil prices for the end consumers in Pakistan.

The global oil prices breached $100/barrel following the Russian attack on Ukraine and crossed to over $105/barrel.

The estimates for the next review of prices are based on ten days from February 14 to 24, 2022. “The massive surge in the global oil prices on February 24 would be part of Oil & Gas Regulatory Authority (Ogra)’s recommendations for revision in the prices,” a top official of the oil sector firm said.

He said that Pakistan buys the oil from Saudi Arabia, United Arab Emirates and Kuwait, which rely on DME Oman benchmark. “If Brent crude prices are increasing, it will also also affect DME Oman, and Pakistan will be buying expensive oil from there.”

He said that April future contracts were being done at $99/barrel on Wednesday as oil prices kept on surging for the last many days due to tension between Russia and Ukraine.

The official said that the oil price in Pakistan was determined on the basis of petrol and diesel prices in the international market. During the last ten days, the average price of petrol came up to $106/barrel and diesel $108/ barrel, which was four dollars higher compared to the average price of the two in the first fifteen days of the this month.

On the basis of the average prices of diesel and petrol, the ex-refinery price of diesel and petrol would be higher by Rs6-7/litre, the official said.

Government increased the prices of petroleum products to historically unprecedented levels in the last review.

It brought the sales tax to zero on petrol; however, petroleum development levy was raised to bolster revenue collection.

Pakistan’s import of petroleum products was 125 percent higher compared to last fiscal in value terms while it imported more than 25 percent in volume, which surged to $5.734 billion from $ 2.549 billion in the same period last year.