Pakistan’s Oil and Gas Regulatory Authority will announce revised petroleum prices tonight under the government’s weekly review mechanism, with the new rates taking effect from July 11 (Pakistan Observer). Analysts expect petrol to remain unchanged at Rs297.53 per litre and high-speed diesel at Rs309.50, despite turbulence in global energy markets following the collapse of the US-Iran ceasefire and renewed strikes near the Strait of Hormuz.
Market analysts note that while the ceasefire breakdown has created a spike in oil price futures, the movement has not been sustained or large enough to breach the revision threshold under OGRA’s weekly pricing formula, which is based on an average of import parity prices over the preceding week. If international crude prices sustain their upward movement over the coming days, the July 17 review will be the more significant decision point.
The petroleum levy controversy
Jamaat-e-Islami, which held nationwide protests on July 10 specifically over fuel prices, argues that the government’s collection of approximately Rs118 per litre in taxes and levies on petrol renders the weekly revision mechanism irrelevant to consumers: with a tax burden that high, even a meaningful fall in global crude prices produces only a marginal reduction in the retail price. The Rs1.97 reduction announced on July 4 — described by JI as “a joke” — illustrated this dynamic.
The petroleum development levy, which is the largest component of the tax burden on fuel, is a key revenue instrument in the current IMF programme. OGRA’s pricing recommendations operate within constraints set by the levy, which the government cannot reduce without opening a fiscal gap that would require renegotiation with the Fund. This is the structural reason that consumer petrol prices in Pakistan move slowly even when international oil prices fall sharply.
The next major variable is whether the Gulf situation deteriorates further and pushes crude above the level where a weekly revision upward becomes unavoidable.
