Fuel prices start going down

The ‘Eid cuts’ reflect an expectation that a US-Iran deal is imminent

There is the hoary old joke about the man who is butting the wall. Another man asks why he is doing so. The first man says “It feels good when I stop.” That is the kind of relief that Prime Minister Shehbaz Sharif announced on Thursday, when he announced a cut of Rs 22 per litre ib the price of petrol and diesel to follow on the previous cut of Rs 6 the previous Thursday, bringing the price to Rs 380 per litre for high-speed diesel and Rs 381 per litre for petrol, from Rs 410 per litre for both HSD and petrol. The cuts have been made possible not because of any solid developments, but because of expectations that the crisis which has driven oil prices from a pre-war $70-$71 per barrel to a peak over $120 per barrel. Brent Futures are about $90 a barrel presently, which reflects an expectation that a deal might be imminent. It also reflects the earlier decision by US President Donald Trump not to resume the conflict with Iran.

The two sides seem to be approaching an agreement in which the Straits of Hormuz are reopened immediately, while the Iranian nuclear programme would be deferred to the future. It would thus turn out that the USA had gone to war merely to get the Hormuz Strait reopened, when it had been open before its attack. It would be difficult to work out why the USA had put the world through so much suffering, when all it obtained was Iran to engage in negotiations it was already carrying out in Geneva when the war started.

Pakistan is one of the many Third World oil importing countries adversely affected by this crisis. However, it plays an important role as a mediator in this crisis, and its efforts have generally won admiration. A settlement has not yet been achieved, but now the pressure being built on Pakistan and other countries like it, by the closure of the Hormuz Strait, is now being felt by the USA. Mr Trump faces particular pressure because of the midterm elections he is facing. It is perhaps awkward for him that no one else is particularly close to polling in their respective election cycles. The USA will only be  following its best interests by agreeing to a deal.