Government Raises Petrol, Diesel Prices Sharply as Daily Pricing Mechanism Takes Effect

The government announced a significant hike in fuel prices on Friday, raising petrol by Rs5.44 and high-speed diesel (HSD) by Rs31.05 per litre, effective immediately for a three-day period ending July 20. The adjustment reflects the impact of elevated import premiums and rising global oil prices driven by renewed regional tensions.

Following the revision, petrol now retails at Rs316.15 per litre, while HSD stands at Rs354.35 per litre. According to a press release from the Petroleum Division, the new rates took effect on July 18.

Diesel prices have retreated from an all-time high of Rs520.35 recorded on April 3, after surging from Rs281 per litre following the outbreak of the U.S.-Iran conflict on February 28. Similarly, petrol peaked at Rs458.41 on April 3, up from Rs266 in early March.

Earlier in the day, Petroleum Minister Ali Pervaiz Malik declared that fuel prices would transition to a daily revision cycle to better track volatile international markets amid ongoing hostilities between Iran and the United States. Since early March, the government had implemented weekly adjustments alongside conservation measures to mitigate potential supply disruptions from the Middle East conflict. In April, targeted relief measures were introduced to provide subsidised fuel to vulnerable segments.

The minister stated that the federal cabinet and the prime minister have tasked the Oil and Gas Regulatory Authority (Ogra) with determining daily fuel prices based on global market trends. Ogra will not only publish the applicable rates but also disclose the underlying factors determining the final pump price.

Currently, the government levies approximately Rs105 per litre on both products through customs duty, in addition to the petroleum levy, climate support levy, and inland freight equalisation margin.

The shift to daily pricing has drawn opposition from the All Pakistan Dealers Association, which rejected the move and signaled plans to consider protest action next week.

Petrol primarily fuels private transport, small vehicles, rickshaws, and two-wheelers, making its price fluctuations acutely felt by middle and lower-middle-income households. Diesel, meanwhile, powers heavy transport, power plants, and large generators, meaning its cost changes cascade broadly across the economy.

Petrol and HSD remain the primary revenue generators for the sector, with combined monthly sales of 700,000 to 800,000 tonnes, dwarfing the mere 10,000 tonnes of monthly kerosene demand.

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