Pakistan has raised retail gasoline and diesel prices by Rs55/l, or about 20pc, citing higher global oil prices linked to the war in the Middle East and concerns over potential supply disruptions.
The government is increasing gasoline prices to Rs321.17 ($1.16) per litre from Rs266.17/litre, and diesel prices to Rs335.86/litre from Rs280.86/litre, petroleum minister Pervaiz Malik said at a press conference late Friday in Islamabad, according to state news agency APP. The new prices took effect from midnight on Friday local time.
"We will now review these prices on a weekly basis," Malik said, adding that the government would reduce prices once global market conditions improve. "There is no doubt we are facing extraordinary circumstances," the minister said, noting that diesel demand is expected to rise during the upcoming crop season and that the fuel is also widely used by public transport serving low-income communities.
Global oil prices have surged in the wake of US and Israeli air strikes against Iran and Tehran's subsequent retaliation against US military bases and wider energy infrastructure and shipping in the Middle East over the past week, all of which is causing disruption to oil and gas supply. Qatar's energy minister warned crude prices could reach $150/bl in the next 2-3 weeks.
To mitigate potential supply disruptions along key shipping routes, Pakistan has also begun efforts to secure crude from alternative sources. Two vessels operated by state-owned PNSC are currently heading towards the ports of Yanbu in Saudi Arabia and Fujairah in the UAE to support Pakistan's energy needs, the minister said, adding that Saudi Aramco had assured Pakistan that if a larger tanker was arranged it could be loaded at Yanbu and sent towards Pakistan.
Pakistan sources at least 60pc of its gasoline requirements from the Mideast Gulf, with the UAE supplying the majority. State-owned refiner PSO typically buys 92R gasoline cargoes from regional refiners including Oman's state-owned OQ, Dubai-based ENOC and PetroChina Dubai.
But clean tanker freight rates in the Mideast Gulf have surged since the war began. Cross-Mideast Gulf MR rates had risen to about $1mn–$1.025mn as of 4 March, up from $375,000–$400,000 on 27 February. Before the war, the vessel Torm Damini was chartered to ship 35,000t of gasoline from Fujairah to Pakistan for about $400,000, but shipping brokers say rates on the route have since climbed to around $1.2mn–$1.5mn.
Stockpiling
Market participants said reports of the impending gasoline and diesel price increase had prompted some advance buying in the domestic market.
"There was some stockpiling after reports emerged that the government might raise prices earlier than the usual fortnightly schedule," one Pakistan-based gasoline trader said, adding that some dealers and pump owners held back supplies ahead of the increase: "Some dealers and pump owners hoarded fuel to profit from the new prices."
