Diesel Fuel Prices May Drop Slightly in Pakistan
The price of diesel fuel is expected to play a crucial role in the upcoming budget, with the government aiming to balance the need to reduce prices with the need to increase revenue. The outcome of the OPEC+ meeting and the government's decision on the petroleum levy will be key factors in determining the direction of diesel fuel prices in Pakistan.
The federal government is likely to reduce petroleum product prices in Pakistan from June 1, 2025, with petrol prices expected to decrease by Rs0.60 per litre and high-speed diesel by Rs0.28 per litre, despite concerns that the upcoming budget will further burden the public due to an increase in the petroleum levy.
Former finance minister Senator Saleem Mandviwalla has expressed concerns that the upcoming budget will be a "standard-type budget" and will be a burden on the public's pockets, with the petroleum levy expected to be increased to offset a revenue shortfall of Rs700 billion. The Federal Board of Revenue's (FBR) performance has also been criticized, particularly under the Tajir Dost Scheme (TDS), which aimed to bring traders and wholesalers into the formal tax structure.
Global oil benchmarks, Brent crude and US West Texas Intermediate (WTI), recorded a slight downturn, with Brent crude dropping 0.19% to $64.62 per barrel and WTI falling 0.24% to $61.38 per barrel. However, the market later saw a marginal recovery due to thin trading volume. OPEC+ signals are being closely monitored, with eight member countries set to meet on May 31 to finalise a new output strategy, which may include raising production by 411,000 barrels per day for July.
The reduction in petroleum product prices is expected to provide some relief to the public, but the increase in the petroleum levy is likely to offset some of the benefits. The government's decision to reduce prices will be closely watched, as it will have a significant impact on the economy and the public's purchasing power.