WTI crude oil prices are up to $69 per barrel, Brent crude stands at $72 per barrel, while the Murban crude from UAE has fallen to $66 per barrel with the reopening of the Strait of Hormuz and setting the stage for yet another decline in Pakistan’s fuel prices.
The possibility of a reduction in the second price of the fuel by the Pakistani government within the coming weeks has become a reality. With a decline in the global prices of crude oil due to the opening up of the Strait of Hormuz, Rana Sanaullah, Political Advisor to the Prime Minister, on Wednesday announced that the government is expecting a further reduction in the prices of petrol and diesel in Pakistan.
What Rana Sanaullah said and what it means
Rana Sanaullah informed the media that international oil prices had increased due to the conflict between Iran and Israel, making oil firms buy oil at very high prices – prices that were directly responsible for increases in fuel prices within Pakistan. The government changed its usual practice of price revision after two weeks to review prices on a weekly basis to cope with the situation.|
Why did crude prices drop so rapidly?
The rapid decline in the price of crude on a global scale is an indication of the proportion of risk premium in the initial price rise rather than any shortages in supply. During the period when there was tension between Iran and Israel, the risk of long-term closure of the Strait of Hormuz, through which one-fifth of global oil and LNG production flows, resulted in Brent crude reaching well beyond $100 per barrel in terms of price. With the opening of the strait, this risk premium has been stripped away instantly with WTI hovering close to $69, Brent around $72, and UAE Murban close to $66.
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Existing fuel prices within the country – what would the reduction be based on?
The Pakistani government effected a massive cut in petrol prices just recently, slashing the price per litre of petrol by Rs74 to Rs299 and per litre of high speed diesel by Rs67 to Rs311. This came after the first relaxation of tension between the two countries, resulting in the signing of the US-Iran memorandum. Another petrol and diesel price cut in Pakistan will see prices fall even lower than the adjusted price levels.
Weekly reviews replace the standard fortnightly cycle
One structural change the crisis introduced — weekly fuel price reviews — may persist in some form even as the emergency passes. Sanaullah described the shift as a crisis-period measure to protect domestic supply, but more frequent price adjustments also give consumers faster relief when international prices drop, and they limit the government’s exposure to large single-revision swings that historically generate political pressure regardless of their direction.
Consumer concerns
As far as the upcoming petrol price reduction in Pakistan is concerned, it will be conditional on whether the level of global oil prices sustains itself in the current form until the end of the review period and whether the monitor suggests passing through the prices with the degree that the international market reflects. The Strait of Hormuz is still open, tensions are easing, and all three big crude price indices are considerably below their conflict time highs.
Nayab Fatima is a university graduate and an emerging media professional with a strong passion for journalism, research, and independent reporting. She specializes in developing well-researched, fact-based, and analytical news stories covering a wide range of sectors, with particular expertise in technology, telecommunications, aviation, and the automobile industry.
