Massive Relief Likely for Consumers as Petrol Prices May Drop by More Than Rs55 / Litre

ISLAMABAD: A sharp decline in global crude oil prices following reports of a possible agreement between the United States and Iran has raised the prospect of a major reduction in petroleum product prices in Pakistan, with consumers likely to receive relief of more than Rs55 per litre from June 20.

According to official sources, the government is preparing a substantial cut in petrol and diesel prices after Prime Minister Shehbaz Sharif directed relevant authorities to pass on the benefit of falling international oil prices directly to consumers. The Petroleum Division, Pakistan State Oil (PSO), and the Oil and Gas Regulatory Authority (OGRA) have reportedly completed working papers outlining various pricing scenarios.

Sources said the prime minister has instructed the petroleum minister to ensure maximum public relief and to offset the impact of the steep increase in fuel prices announced on March 7. Government officials are currently reviewing proposals aimed at reversing the burden imposed by that hike.

Prime Minister Shehbaz Sharif was reportedly dissatisfied with the March 7 increase and has now emphasized that the gains resulting from lower crude oil prices should be reflected in domestic fuel rates.

On March 7, the government raised petrol prices by Rs55 per litre to Rs321 per litre, while High-Speed Diesel (HSD) was increased by the same amount to Rs335.17 per litre.

The anticipated price reduction follows a significant drop in Arab Light crude oil, Pakistan’s benchmark for petroleum pricing. Arab Light crude has fallen by $16 per barrel within a week, declining from $96 per barrel on June 11 to around $80 per barrel on June 18.

Earlier this year, Arab Light crude traded at $70 per barrel on February 27 before surging to $89 per barrel by March 6. Amid escalating US-Iran tensions and fears of a wider regional conflict, prices later climbed to a peak of $140 per barrel on March 23.

Meanwhile, reports of a substantial reduction in fuel prices have triggered concern among oil marketing companies. Industry sources said several firms have begun lobbying against a one-time cut of more than Rs55 per litre and are instead advocating a phased reduction strategy.

The companies argue that an immediate and significant decrease could result in heavy losses on existing inventories purchased at higher prices. As a result, they are seeking a gradual adjustment mechanism to minimize financial exposure.
Sources further indicated that the Petroleum Division is expected to issue a formal notification regarding the revised fuel prices on Friday night, subject to final approval from the prime minister.

If approved, the reduction would represent one of the largest cuts in petroleum prices in Pakistan’s history and provide significant relief to consumers facing persistent inflationary pressures.