ISLAMABAD: Oil prices in the country are likely to rise by up to 16% effective from June 1 due to fluctuations in global crude prices.
Sources in the petroleum ministry said it had received a summary from the Oil and Gas Regulatory Authority (OGRA) on Thursday which suggested an increase in oil prices following fluctuations in global markets.
Prices of all products, except kerosene oil, are deregulated and Ogra only monitors the prices.
According to the summary prepared by Oil and Gas Regulatory Authority (OGRA), the price of petrol is expected to have a rise up to Rs6.19 per litre, while diesel Rs7.91 litre.
Similarly LDO, mainly used for industrial purposes, may record an increase of Rs7.62 per litre, meaning the price will go up from Rs57.94 to Rs65.56.
The price of HOBC, mainly used in luxury cars, may show a hike of Rs13.25 per litre taking the price to Rs93.56 from Rs80.31 per litre.
However, petroleum ministry officials said the regulatory authority has proposed to not pass on the increase in oil prices. They added Ogra had recommended absorbing the rise in petroleum levy.
However, the Ministry of Finance may oppose this proposal as unchanged oil prices would affect the country’s revenues. The final decision will be taken by Prime Minister Nawaz Sharif.
Officials said the government could still keep oil prices unchanged before the federal budget to avoid criticism from political parties and people who will face different taxes in the budget.
Oil prices rose in Asia on expectations that the latest US stockpiles report will show a further dip in crude reserves as traders worry about a global oversupply, said analysts.
“Speculation that US oil inventories could decline again in the weekly report appears to have attracted some relative support to prices,” said market analyst Nicholas Teo.
Dealers have been hoping a slowdown in the US output, coupled with increased demand during the summer driving season, could whittle down global supplies, which was a key reason for the collapse of more than 50% in prices between June and January.
Following this global price rise, the effect will be felt in prices of petrol, high-speed diesel (HSD), light diesel oil (LDO), kerosene oil and high octane blending component (HOBC).