The federal government on Monday increased the price of petrol and high-speed diesel (HSD) by 39

The latest revision comes three days after last week’s increase, when the government increased the price of petrol and high-speed diesel (HSD) by Rs3.81 and Rs3.59 per litre, respectively, for the next three days.

Read:Govt hikes petrol by Rs3.81, HSD by Rs3.59 till August 24Last month, the government announced a new pricing mechanism under which petroleum product prices would be reviewed and notified on a daily basis, replacing the weekly pricing mechanism, as renewed tensions between the United States and Iran continued to drive volatility in global oil markets and raise concerns over fuel supplies.

2024-25, petroleum products constitute one of the country's largest import categories, making the economy highly vulnerable to changes in global crude oil prices.

Domestic refineries satisfy only part of national demand, while the remainder is met through imports of crude oil and refined petroleum products.

Consequently, every increase in international oil prices raises Pakistan's import bill, pressures foreign exchange reserves, and contributes to inflation. Pakistan previously exercised significant government control over petroleum pricing through subsidies and administrative interventions.

During periods of elevated global oil prices, successive governments delayed passing price increases to consumers, creating financial pressures for oil marketing companies, refineries, and the national budget.

Large fuel subsidies widened fiscal deficits, increased public borrowing, and weakened macroeconomic stability. Global geopolitical developments continue to pose significant risks.

International oil prices are influenced by decisions taken by OPEC+, conflicts in the Middle East, sanctions on oil-producing nations, and disruptions in critical shipping routes such as the Strait of Hormuz and the Red Sea.

Since Pakistan imports the majority of its petroleum requirements, these developments quickly translate into higher domestic fuel prices. Also Read:Fuel expenses jump 39% to Rs22b. International benchmark and US crude futures rose on Friday after US President Donald Trump threatened economic sanctions on Iran's trading partners, raising expectations of tighter supply in the coming weeks.

International benchmark Brent crude futures rose 8 cents, or 0.09%, to $93.86 a barrel by 10:40 am CDT (1540 GMT).

US West Texas Intermediate crude was up 16 cents, or 0.18%, at $86.99. "The immediate impact on supply may be limited as Iranian exports are already heavily constrained by the US naval blockade," said Crispus Nyaga, research analyst at Empire FX.