Petrol cut by Rs1.49, diesel by Rs2.73 as oil prices ease

The government has cut the price of petrol by Rs1.49 a litre and high-speed diesel by Rs2.73 a litre, the second reduction in two days as world oil prices ease.

From today, September 30:

• Petrol costs Rs387.54 a litre, down Rs1.49
• High-speed diesel costs Rs402.24 a litre, down Rs2.73

The new prices apply for September 30, The Express Tribune reported.

The Petroleum Division announced the new prices on Tuesday, Dawn reported. A day earlier, petrol had been cut by Rs2.27 to Rs389.03 a litre and diesel by Rs3.56 to Rs404.97. Together, the two cuts have taken Rs3.76 off a litre of petrol and Rs6.29 off a litre of diesel in two days.

Why prices are falling

The cuts follow a drop in international oil prices as supplies from the Middle East begin to recover:

• Brent crude fell $1.38, or 1.3 percent, to $103.88 a barrel on Tuesday
• US crude fell $2.04 to $90.58 a barrel
• Saudi Arabia has restarted oil loadings at its Red Sea port of Yanbu after a pipeline shut down by drone attacks came back into use
• The United States offered to lend 40 million barrels from its Strategic Petroleum Reserve to bring fuel prices down

Since July 17, fuel prices have been reviewed daily instead of weekly, a change made because of volatile world markets and the tensions between the United States and Iran, so falls in global prices now reach Pakistani pumps quickly.

Still far above pre-war levels

Despite the cuts, fuel remains much more expensive than before the war between the United States and Iran began on February 28:

• Petrol was Rs266 a litre in early March, and peaked at Rs458.41 on April 3
• Diesel was Rs281 a litre before the war, and peaked at Rs520.35 on April 3

The government still collects Rs114 a litre in taxes and duties on petrol and Rs100 a litre on diesel.

Relief and austerity

To help lower-income households, the government is running a fuel relief scheme that takes Rs100 a litre off petrol:

• Motorcycles and rickshaws: up to 20 litres a month, worth up to Rs2,000
• Cars up to 800cc: up to 30 litres a month, worth up to Rs3,000

The scheme is meant to cover about 11.8 million people, and about 7.6 million have registered so far.

The government has also brought back austerity measures since September 17: shops close at 9pm, marriage halls at 10pm and restaurants at 11pm, and fuel allocations for official vehicles have been cut by half for three months.

Why it matters

Fuel prices feed into almost everything, from bus fares to the cost of food carried by truck. Two cuts in two days offer some relief, especially for diesel users such as transporters and farmers. But with Middle East supplies still disrupted and the future of the Strait of Hormuz unresolved, prices could rise again as quickly as they have fallen. Read more on the fuel relief scheme and on Iran’s demands over Hormuz.

This article draws on reporting by Dawn and The Express Tribune.