The federal government is expected to keep petroleum prices unchanged for the next 15 days following the International Monetary Fund’s (IMF) decision to withdraw its demand for a 15% General Sales Tax (GST) on fuel.
Previously, the IMF had urged Pakistan to impose GST on petroleum products and increase the petroleum levy from Rs 60 to Rs 70 per litre. However, it remains unclear whether the government will raise the levy. If it decides not to, fuel prices are likely to remain stable. The government is cautious about raising fuel costs after a recent drop in inflation, which has improved its public image. Any hike could negatively impact this perception.
A key factor supporting the decision to maintain current prices is the recent dip in global oil prices. On Friday, global oil prices fell due to concerns over oversupply and weaker demand, further impacted by a stronger US dollar. Brent crude dropped by 30 cents (0.41%) to $72.26 per barrel, while US West Texas Intermediate (WTI) crude fell by 25 cents (0.36%) to $68.45 per barrel.
Both benchmarks are set to post weekly declines, with Brent expected to fall by 2.2% and WTI by 2.7%.
The U.S. Energy Information Administration reported a significant rise in crude oil inventories, increasing by 2.1 million barrels last week, surpassing the forecast of 750,000 barrels. Meanwhile, the International Energy Agency (IEA) predicts a global oil supply surplus by 2025, even if current OPEC+ production cuts persist. Rising production from the U.S. and other non-OPEC countries is expected to contribute to this surplus.
The IEA has raised its 2024 global oil demand growth forecast by 60,000 barrels per day (bpd) to 920,000 bpd, while maintaining its 2025 forecast at 990,000 bpd. In contrast, OPEC has revised its demand growth forecasts for 2024 and 2025 downward, citing weaker demand from China, India, and other regions.
As of the last price revision on October 31, petrol prices in Pakistan were raised by Rs 1.35, setting the new rate at Rs 248.38 per litre. High-speed diesel (HSD) saw a larger increase of Rs 3.85, now priced at Rs 255.14 per litre.
The government is set to announce the petroleum prices for the next fortnight later today. Given the current global and domestic economic conditions, many expect no further hikes.
