ISLAMABAD, July 17: Famous economist Farrukh Saleem has warned people that petrol prices could go up again in Pakistan because of rising tensions between America and Iran.
Speaking to ARY News, Saleem said that Global oil markets are nervous due to the risk of wider conflict in the Middle East. Brent crude oil jumped from around $70 per barrel in early July to $85 in just two weeks, a $15 increase.
In Pakistan, petrol already costs 310.71 rupees per litre and high-speed diesel is at 323.30 rupees after the last hike. The government is also thinking about switching to a daily pricing system like India’s, which would pass international price changes directly to local pumps.
Farrukh Saleem said oil prices mostly depend on supply and demand. Right now supply is actually higher than demand, which should push prices down. But geopolitical tensions and war fears are adding a big premium.
He pointed out that in the earlier phase of tensions, prices shot up to $120 per barrel. This time the rise has been smaller, from $70 to $85. He also claimed that when global prices go up by 5 percent, Pakistan often raises local prices by 10-12%. But when global prices fall by 10%, Pakistan only cuts by 1.5-2 percent.
Saleem added that the government is earning a lot from the petroleum levy. It used to be just 10 rupees per litre a few years ago, went as high as 160, and now sits at 80 rupees. In the current budget, they’re targeting 1.7 trillion rupees from it, compared to only 18 billion back in 2000.
He said both the government’s tax revenue and oil marketing companies’ profits are rising, while ordinary people bear the full cost.
If the situation in the Middle East gets worse or the conflict drags on, oil prices could climb further. That would put extra pressure on Pakistan’s import bill, foreign reserves, and inflation.
Also Read: Petrol shortage fears grow in Pakistan, including Karachi