Expected Relief as Petrol Price May Drop by Rs. 41 Per Liter

Web DeskOctober 6, 20233894 min
Expected Relief as Petrol Price May Drop by Rs. 41 Per Liter

Fuel prices in Pakistan are expected to significantly decrease on October 15 due to a combination of factors, including a drop in global oil prices, the strengthening of the Pakistani Rupee, and Russia’s decision to lift the ban on pipeline diesel exports.

Assuming that international oil prices and the exchange rate remain stable over the next 10 days, a report by Arif Habib Limited anticipates a substantial reduction in local petrol and diesel prices. Specifically, petrol prices are expected to decrease by Rs. 41 per liter, while diesel prices are expected to drop by Rs. 19 per liter in the next fortnightly pricing cycle, which begins on October 16, 2023.

The drop in international oil prices during the week can be attributed to various factors, including concerns about global demand, a stronger US Dollar, inflationary pressures, and increased oil supplies. Prices of benchmark crude oils such as WTI, Brent, and Arablight have all seen significant declines, with drops ranging from 9% to 11% compared to the last fortnightly average prices.

Also Read: Caretakers Cut Petrol Price by Rs. 8 After Multiple Hikes

The international price of gasoline (Motor Spirit or MS) has plummeted by 15% to $84.3 per barrel, down from the previous average of $99.3 per barrel. Similarly, the international prices of High-Speed Diesel (HSD) have decreased by 10% to $110.6 per barrel, compared to the previous average of $122.3 per barrel.

Meanwhile, the Pakistani Rupee (PKR) has appreciated by 2.7% against the US Dollar, reaching a rate of 283.87 PKR/USD compared to the previous fortnightly average of 291.65 PKR/USD.

In the past three days, international MS and HSD prices have dropped by $12 and $9 per barrel, respectively. The Rupee has also gained approximately 3% against the US Dollar since the last review of fuel prices. This trend is crucial for the anticipated reduction in fuel prices to materialize effectively during the upcoming fortnightly review on October 15.

Even if the same currency adjustment as the last fortnightly prices for MS is applied and no adjustment is made for HSD in the upcoming pricing cycle, MS prices are expected to decrease by Rs. 28.6 per liter, while HSD prices are expected to drop by Rs. 19.3 per liter.

In terms of inflation, taking the expected fuel price reductions into account, Arif Habib Limited estimates that October’s Consumer Price Index (CPI) could decrease by 92 basis points, resulting in an inflation rate of 27.5%.

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