Business

Fuel prices expected to drop significantly in May

Petrol price estimated to drop by Rs13.40/litre, HSD to come down by Rs8.19/litre

Our Correspondent May 14, 2024

Market talk suggests that the significant increase in demand for diesel partly stemmed from control over fuel smuggling from neighbouring Iran. photo: file

ISLAMABAD:

The ex-depot petrol rate may decline by Rs13.40 per litre, and high-speed diesel (HSD) by Rs8.19 per litre for the next fortnight starting from May 16, according to an estimate.

The premium on petrol is expected to be around $10.30 per barrel, and $6.50 per barrel on HSD, while the exchange rate adjustment is expected to be 12 paisa. However, there are still three days left for the announcement of new prices.

Global prices have massively tumbled after stability returned to the Middle East following the Iran-Israel missile attacks and a reduction in tensions in the Red Sea. Globally, petrol prices have fallen by $6.32 per barrel to $99.93, indicating a positive market shift.

Read Petrol price slashed by Rs5.45, HSD Rs8.42

The prices of kerosene oil (KERO) are likely to reduce by Rs9.49 per litre, and light diesel oil (LDO) by Rs6.54 per litre.

If the government allows the reduction as per estimates, the price of petrol would come down to Rs275.09 per litre from the current rate of Rs288.49 per litre, the price of HSD would reduce from Rs281.96 to Rs273.77 per litre, the price of KERO would come down to Rs173.85 from Rs183.34, and LDO price would be Rs164.12 from Rs170.66 per litre.

The government is charging a petroleum levy of Rs60 per litre on both petrol and HSD and is projected to collect Rs936 billion in the current fiscal year against a budgeted target of Rs869 billion.

The government anticipates that the reduction in the price of petroleum products would help increase the sale price and consumption of petroleum products, which dropped by 4% on a month-on-month basis in April 2024 and 6% on a year-to-year basis. While the Oil and Gas Regulatory Authority (OGRA) has not yet submitted a formal summary to the Finance Division, preliminary reports suggest that it is likely to recommend a decrease in petrol and diesel prices for the second half of May 2024.

Published in The Express Tribune, May 14^th, 2024.

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