Govt may maintain oil prices for next fortnight

The prices of petroleum products are anticipated to undergo slight adjustments in the upcoming fortnight, influenced by a marginal rise in global Brent crude prices, as projected by the oil industry on Thursday.

The government, following its bi-monthly schedule, is set to announce the new prices on December 31, effective from January 1, 2024, and applicable until January 15. According to industry estimates, petrol and kerosene oil prices are expected to decrease by Rs1 per litre, while high-speed diesel (HSD) and light diesel oil (LDO) prices might increase by Rs2 per litre.

These estimates from Oil Marketing Companies (OMCs) are based on a scenario with zero adjustments in the exchange rate, current petroleum levy (PL) rates, and the general sales tax (GST) rates. The government currently imposes a PL of Rs60 per litre on petrol and HSD, with a zero rate on GST.

Internationally, Brent prices have fluctuated between $77.95 and $81.07 per barrel since December 16, 2023. In the last review, the government applied an exchange rate of Rs284.28 to a US dollar.

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Meanwhile, concerns over potential drone and missile attacks by the Houthis have led companies transporting crude oil to reroute some tankers away from the Red Sea. This strategic adjustment is expected to cause delays and additional costs for the journeys, exerting upward pressure on oil prices.

Data from the Pakistan Bureau of Statistics (PBS) reveals a 29% decline in refined products' imports to $499 million in November 2023 compared to $708 million in the previous year. In contrast, crude oil imports increased by 4% to $566 million from $546 million in the same month last year.

The Oil Companies Advisory Council (OCAC) notes a significant 16% decline in the sale of petroleum products in the first five months (July-November) of the fiscal year 2023, attributed to higher petroleum prices compared to the same period last year.

In the meanwhile, companies that transport crude oil stopped sending some tankers through the Red Sea to avoid the threat of drone and missile attacks by the Houthis. Rerouting the vessels would cause delays and extra cost for the journeys, putting upward pressure on oil prices, experts said.