Huge Relief Expected as Petrol Price Likely to Decrease by Rs. 41 Per Liter

Fuel prices in Pakistan are expected to see a massive decrease due to this week’s global oil prices coupled with the Pakistani Rupee’s massive uptick and Russia’s move to lift the ban on pipeline diesel exports, with initial estimates suggesting the per liter rates for both grades to fall significantly below 300 on October 15. Assuming that international prices and the Pakistani Rupee remain at the same level for the next 10 days, a report by Arif Habib Limited expects local petrol and diesel prices to go down by Rs. 41/liter and Rs. 19/liter in the next fortnightly prices effective from 16 October 2023. Arif Habib Limited in a brief market review noted on Friday that international oil prices have declined significantly during the week amid demand concerns, stronger USD, inflationary pressure, and increasing supplies. The prices of WTI, Brent, and Arablight dropped by ~9 percent ~11 percent as compared to the last fortnightly average prices. The international gasoline (MS) plummeted by 15 percent to $84.3/bbl compared with the last fortnightly average of $99.3/bbl. Similarly, the international prices of HSD took a dip of 10 percent to $110.6/bbl compared with the last fortnightly average of $122.3/bbl. Meanwhile, the PKR has appreciated 2.7 percent to 283.87/$ compared to the last fortnightly average of 291.65/$. Notably, international MS and HSD rates in the past 3 days have dipped by $12 and $9 per barrel, respectively, while the rupee has managed to gain ~3 percent against the US Dollar since the previous review of fuel prices. It is imperative that this trend continues until the upcoming fortnightly review of petroleum rates on October 15 so that the expected dip in fuel prices can be effectively materialized. To recall, the exchange rate adjustment in the last fortnightly prices of MS and HSD was Rs. 11.9/liter and Rs. -2.8/liter, respectively. Even assuming the same currency adjustment for MS and nil on HSD in the upcoming fortnightly prices, the MS and HSD are expected to drop by Rs. 28.6/liter and Rs. 19.3/liter. On the inflation front, incorporating the above, AHL estimates October’s CPI to go down by 92 basis points to 27.5 percent.