“I am grateful that they listened to our appeal and absorbed roughly a Rs15 increase that was coming due for petrol on Friday, helping the government maintain prices,” Petroleum Minister Ali Pervaiz Malik said, confirming that local refineries are assisting the state in stabilizing fuel costs.
Revised Pricing for Petrol and Diesel
Effective November 7, the Oil and Gas Regulatory Authority (Ogra) has set the retail price of petrol at Rs346 per litre, while high-speed diesel (HSD) will cost Rs378 per litre. These rates are scheduled to remain in effect until November 10, with the timeline adjusted to account for the public holiday on November 9. Earlier adjustments during the week saw petrol drop to Rs352.59 and diesel to Rs382.25 on November 6, following a previous cut on November 5.
Oil refineries absorb costs to reduce consumer prices
The current price relief is supported by a 30-day arrangement where oil refineries contribute to a petroleum levy by absorbing a cumulative impact of Rs15 billion. According to government statements, this mechanism allows for a Rs14.71 reduction in the petrol price at the consumer end, keeping it roughly Rs15 cheaper than international market rates. However, industry officials have raised concerns about this policy, noting that it was implemented without prior consultation and could potentially push gross refining margins into negative territory.
Did You Know? While the state strives to suppress retail prices through subsidies provided by refineries, it persists in charging Rs114 per litre in duties and taxes on petrol and Rs100 per litre on diesel.
Context of Global Oil Volatility
The government’s pricing strategy has been heavily influenced by the ongoing conflict between the U.S. and Iran, which first triggered a sharp rise in fuel costs on February 28. Since peaking on April 3—when petrol hit Rs458.41 and diesel reached Rs520.35—the administration has introduced several austerity measures, including a 9pm market closure requirement and a 50% cut in fuel allocations for official vehicles. Finance Adviser Khurram Schehzad told Arab News that the government is also working to build strategic petroleum reserves to protect the country from future supply disruptions.
By forcing refineries to absorb costs, the state is prioritizing short-term price stability to contain inflation, though this strategy creates regulatory uncertainty that may weigh on future energy sector investment.
Transition to daily pricing reflects international oil market fluctuations
Why are fuel prices being updated on a daily basis?
The government transitioned to a daily pricing mechanism on July 17 to better reflect the rapid fluctuations in international oil markets caused by renewed hostilities between Iran and the U.S. This approach allows the state to adjust domestic rates more frequently in response to global trends.
Who is most affected by these fuel price changes?
Petrol price changes directly impact the middle and lower-middle classes, who rely on private transport, small vehicles, rickshaws, and two-wheelers. Changes in diesel prices affect the broader public, as the fuel is essential for the heavy transport sector, power plants, and large generators.
What is the government doing to ensure fuel supply?
Information Minister Attaullah Tarar has stated that there is no fuel shortage in the country. Current commercial inventories of crude oil, diesel, and petrol held by firms are enough to last about 20 to 22 days, and officials aim to expand these total stockpiles to sustain 30, 35, or even 40 days of demand.
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