Govt increases petrol price by Rs2.84, HSD by Rs2.28 per litre for Sept 4

Petrol price rises to Rs349 per litre, while HSD will cost Rs374.31

The federal government on Thursday increased the price of petrol and high-speed diesel (HSD) by Rs2.84 and Rs2.28 per litre, respectively, for September 4.

According to a notification issued by the Petroleum Division, the price of petrol was fixed at Rs349 per litre, while HSD would cost Rs374.31 per litre for September 4.

The latest revision comes a day after the government increased the price of petrol and HSD by Rs2.29 and Rs1.11 per litre, respectively, for September 3.

Read: Govt increases petrol price by Rs2.29, HSD by Rs1.11 per litre for Sept 3

On July 17, the government announced a new pricing mechanism under which petroleum product prices would be reviewed and notified on a daily basis, replacing the weekly pricing mechanism, as renewed tensions between the United States and Iran continued to drive volatility in global oil markets and raise concerns over fuel supplies.

According to the Pakistan Economic Survey 2024-25, petroleum products constitute one of the country's largest import categories, making the economy highly vulnerable to changes in global crude oil prices. Domestic refineries satisfy only part of national demand, while the remainder is met through imports of crude oil and refined petroleum products. Consequently, every increase in international oil prices raises Pakistan's import bill, pressures foreign exchange reserves, and contributes to inflation.

Pakistan previously exercised significant government control over petroleum pricing through subsidies and administrative interventions. While these measures temporarily protected consumers, they imposed substantial fiscal costs. During periods of elevated global oil prices, successive governments delayed passing price increases to consumers, creating financial pressures for oil marketing companies, refineries, and the national budget. Large fuel subsidies widened fiscal deficits, increased public borrowing, and weakened macroeconomic stability.

Global geopolitical developments continue to pose significant risks. International oil prices are influenced by decisions taken by OPEC+, conflicts in the Middle East, sanctions on oil-producing nations, and disruptions in critical shipping routes such as the Strait of Hormuz and the Red Sea. Any interruption in these supply chains can immediately increase crude oil prices and freight costs. Since Pakistan imports the majority of its petroleum requirements, these developments quickly translate into higher domestic fuel prices.

Oil prices hit fresh six-week highs on Thursday ​after new US strikes on Iran and renewed Israeli threats against Tehran heightened concerns about ‌disruptions to Middle East supplies.

Brent crude futures were up $1.66, or 1.7%, at $97.29 a barrel by 1200 GMT, erasing earlier losses, while US West Texas Intermediate crude futures rose $2.03, or 2.2%, to $93.04. Both contracts were heading for ​their fourth day of gains and hit six-week highs earlier in the session.

"The oil market remains tight, with oil inventories still declining globally, translating into higher prices. Some support ​might have also come ​from ongoing tensions ⁠in the Middle East," said UBS energy analyst Giovanni Staunovo.