Oil industry stakeholders have urged the federal government to reduce the petroleum levy on petrol and high-speed diesel (HSD) to limit the impact of potential fuel price increases as international oil markets react to escalating tensions involving the United States, Israel and Iran.
At present, the government charges a petroleum levy of Rs84.4 per litre on petrol and Rs76.21 per litre on HSD. In addition, a climate support levy of Rs2.5 per litre is applied, while import duties of around Rs30–35 per litre are also collected. Combined, these charges bring total taxation on petroleum products to roughly Rs120–125 per litre.
Industry representatives said the recent volatility in global oil markets could lead to higher domestic fuel prices during the next price review if international price increases are fully passed on to consumers.
Officials from the oil sector said the government should consider temporarily reducing the petroleum levy to ease pressure on consumers and contain inflationary effects across the economy.
They noted that global oil prices have risen following intensifying tensions in the Middle East, raising concerns about supply disruptions and higher freight costs. The region is a key hub for global oil supply, and instability there typically affects fuel prices worldwide.
Market developments have already pushed diesel prices higher in international markets. Analysts say prolonged uncertainty could continue to drive up energy costs globally, affecting countries heavily reliant on petroleum imports, including Pakistan.
Pakistan imports a large portion of its crude oil and refined petroleum products, making domestic fuel prices sensitive to changes in international markets. Industry officials said that if global prices continue to increase, petrol and diesel prices in Pakistan are likely to rise further.
They noted that crude oil in the Dubai market has approached around $100 per barrel, while diesel and petrol prices have climbed to about $150 and $100 per barrel respectively.