Govt raises petrol, diesel prices hours after unveiling daily fuel pricing mechanism

• Petrol up by Rs5.44 per litre, HSD by Rs31.05 amid surging global oil prices

• New daily pricing system linked to international market movements takes effect

ISLAMABAD: Just hours after unveiling a new daily petroleum pricing mechanism, the federal government on Friday increased the prices of petrol and high-speed diesel (HSD) by Rs5.44 and Rs31.05 per litre, respectively, citing a sharp rise in international crude oil prices triggered by renewed military escalation between the United States and Iran.

According to a notification issued by the Petroleum Division, the price of petrol has been increased to Rs316.15 per litre, while high-speed diesel (HSD) will now be sold at Rs354.35 per litre.

The revised prices will come into effect from midnight on Friday.

Earlier in the day, Petroleum Minister Ali Pervaiz Malik, accompanied by Information Minister Ataullah Tarar, announced a new mechanism under which petroleum prices will now be determined on a daily basis, citing renewed regional tensions that have pushed international oil prices to their highest level in a month.

Addressing a press conference, Malik said the new mechanism was aimed at enhancing transparency in the petroleum pricing system while shielding the state from financial risks arising from volatile international oil markets.

He said the government had introduced the market-linked pricing mechanism in response to sharp fluctuations in global crude prices, which had once again begun climbing following the latest developments in the region.

Malik acknowledged that the latest increase would be difficult for consumers but maintained that the decision was necessary to safeguard the country's economic interests and strengthen the state.

Before introducing the new pricing mechanism, the government had been revising petroleum prices on a weekly basis since early March following the outbreak of the conflict between the United States and Iran. Prior to that, fuel prices were revised on a fortnightly basis.

Meanwhile, international oil prices extended their rally on Friday after the United States and Iran intensified military attacks across the Gulf, heightening concerns over disruptions to global energy supplies due to the potential closure of the Red Sea, in addition to restricted shipping traffic through the Strait of Hormuz.

Brent crude futures rose $3.98, or 4.73 per cent, to $88.21 a barrel by 2:16pm ET (1816 GMT), while US West Texas Intermediate (WTI) crude futures gained $3.80, or 4.81 per cent, to $82.75 a barrel.

For the week, both benchmark crude contracts were on course to post gains of about 16 per cent, with Brent set for a third consecutive weekly increase and WTI on track for its second straight weekly gain.

The Middle East remains a major exporter of diesel, and concerns over a possible closure of the Strait of Hormuz, coupled with attacks on oil refineries, have tightened global fuel supplies and pushed prices higher across international markets.