Pakistan raised fuel prices to unprecedented levels on Friday as the Iran war triggers an expanding energy crisis. The Shehbaz Sharif government hiked petrol prices by a whopping PKR 137.23 per litre while high-speed diesel costs increased by PKR 184.49 per litre with immediate effect. Oil prices have risen nearly 50% since the war began at the end of February — raising fuel prices across the world and forcing governments to implement energy conservation measures.
The Pakistani government announced on Thursday that petrol prices had been raised by Rs 137.23 per litre (42.7% to Rs 458.41 (up from Rs 321.17). High-speed diesel was up 55% at Rs 520.35 (up from Rs 335.86). The price of kerosene was also increased by Rs 34.08 per litre to Rs 457.80.
“The government took the decision to increase prices after resisting the rise during the past three weeks when it first raised prices by Rs 55 soon after the war started…The government decided to provide a Rs100 per liter subsidy to the motorbike owners and the subsidy will be applicable for 20 liters per month,” said Khurram Shehzad — an advisor to the Prime Minister on Economic Affairs — during an interview with Geo News.
The government also adjusted the petroleum levy rates to limit the increase in diesel prices. The levy on petrol was increased to Rs 160 per litre from Rs 105, while it was reduced to zero on diesel from Rs 55.
NOTE: The currency denomination used here is the Pakistani rupee. PKR 1 = INR 0.33
Oil prices soar
Iran’s attacks on Gulf region energy infrastructure and its tight grip on the Strait of Hormuz — through which a fifth of the world’s oil and natural gas transits in peacetime — have sent oil prices skyrocketing and is impacting global economies.
Oil prices have continued to climb — with Brent crude ( the international standard) jumping 7.8% to $109.03 per barrel on Friday afternoon. Data from S&P Global indicates that spot price for physical Brent cargo soared to $141.36 on Thursday. This is the highest level it has reached since the 2008 financial crisis. The spot price reflects demand for Brent oil that will be delivered in the next 10 to 30 days.