Another dip in petrol prices is expected in Pakistan in the coming days. Anticipation is building on the global oil market as petroleum product prices are expected to take a significant dip, potentially plummeting by $7 per barrel.
This downward trend is currently reflected in the Gulf market, where crude oil prices have fallen to $92 per barrel, and on the global stage, where they stand at $84 per barrel.
In line with international rates, Pakistan is poised to witness a substantial reduction in petrol prices, with an estimated decrease of approximately Rs22 per liter set to take effect from October 16. Diesel prices are also projected to follow suit, with a drop of more than Rs20 per liter expected.
Converting from the dollar rate, the current price of a barrel of oil in Pakistan is estimated to be around Rs26,220. This marks a significant decline from the price of Rs29,898 per barrel observed on September 15.
It’s important to note that on September 30, the government took measures to reduce petrol prices by Rs8, bringing the new price down to Rs323.38 per liter. Similarly, high-speed diesel became more affordable by Rs11, with the new price set at Rs318.18 per liter.
The exchange rate of the Pakistani Rupee against the US Dollar has also witnessed a decrease of more than Rs20 recently, further contributing to the potential reduction in fuel prices.
Approximately 23 days ago, there was a significant influx of petroleum products into the market, which, coupled with the recent developments in global oil prices, the Pakistani Rupee’s positive performance, and Russia’s decision to lift the ban on pipeline diesel exports, could provide substantial relief to the public.
Assuming that international prices and the Pakistani Rupee maintain their current levels for the next 10 days, a report by Arif Habib Limited anticipates local petrol and diesel prices to decrease by Rs. 41/liter and Rs. 19/liter, respectively, in the upcoming fortnightly prices effective from October 16, 2023.
The decrease in international oil prices during the week can be attributed to concerns about demand, a stronger US Dollar, inflationary pressures, and increasing supplies. WTI, Brent, and Arab light crude oil prices have dropped by approximately 9% to 11% compared to the last fortnightly average prices.
International gasoline (MS) prices have plummeted by 15% to $84.3/bbl, while international prices of high-speed diesel (HSD) have taken a 10% dip to $110.6/bbl compared with the last fortnightly averages.
Meanwhile, the Pakistani Rupee (PKR) has appreciated by 2.7% against the US Dollar, standing at 283.87/$ compared to the last fortnightly average of 291.65/$.
Recent trends show that international MS and HSD rates have decreased by $12 and $9 per barrel, respectively, over the past three days, while the rupee has gained approximately 3% against the US Dollar since the previous review of fuel prices. This trend is crucial for the expected dip in fuel prices, which can be effectively materialized if it continues until the upcoming fortnightly review of petroleum rates on October 15.
It’s important to note that the exchange rate adjustment in the last fortnightly prices of MS and HSD was Rs. 11.9/liter and Rs. -2.8/liter, respectively. Even assuming the same currency adjustment for MS and no adjustment for HSD in the upcoming fortnightly prices, MS and HSD are expected to drop by Rs. 28.6/liter and Rs. 19.3/liter, respectively.