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The prices of petroleum products in Pakistan are likely to witness a significant hike starting July 1, 2025, as global oil markets experience sharp upward trends due to rising geopolitical tensions. According to market analysts at Arif Habib Limited, petrol (motor spirit) is expected to increase by Rs. 21 per liter, while high-speed diesel (HSD) may rise by Rs. 27 per liter in the upcoming fortnightly review.
This sharp increase is anticipated as the international prices of both Gasoline and Gas Oil (the benchmarks for petrol and diesel) continue to surge amid global instability. If this adjustment is made, the retail price of petrol could rise to Rs. 279–280 per liter, while diesel might hit Rs. 289–290 per liter.
Global Tensions Driving Crude Oil Prices Upward
The primary driver behind the anticipated increase is the growing conflict between Israel and Iran, which has added considerable uncertainty to the global energy market. As of June 20, 2025, international oil prices recorded substantial increases over the week:
- Gas Oil surged by 9.6%, reaching USD 93.3 per barrel
- Gasoline rose by 4.5%, reaching USD 83.4 per barrel
These developments have intensified fears of supply disruptions in the region, prompting oil prices to climb to multi-month highs. Pakistan, being a net importer of petroleum products, is directly exposed to such fluctuations in international markets.
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Recent Domestic Price Adjustments
On June 15, 2025, the Government of Pakistan already increased the prices of petroleum products as part of its biweekly price review:
- Petrol was increased by Rs. 4.80 per liter
- High-Speed Diesel was increased by Rs. 7.95 per liter
These adjustments were part of routine pricing measures, but also reflected the early signs of global price pressures. The upcoming increase, however, is expected to be more drastic due to the compounding impact of international crude price volatility.
Economic Impact of Rising Fuel Prices
The expected increase in fuel prices will likely have broad economic consequences, especially at a time when the country is grappling with high inflation and sluggish growth.
Key Impacts:
- Transportation Costs: Higher diesel and petrol prices will immediately raise freight and public transport costs, affecting goods movement across the country.
- Inflation: A fuel price hike often triggers secondary inflation by raising the cost of essential commodities, especially food and agriculture products.
- Fiscal Pressure: The government may face pressure to increase subsidies or cut taxes on fuel to provide relief, potentially widening the fiscal deficit.
- Consumer Strain: Households already managing tight budgets may find it even harder to absorb rising utility and transportation expenses.
Outlook: What to Expect Next?
If the current geopolitical situation persists and international oil prices remain high, Pakistan may continue to see rising fuel costs in the months ahead. Much will depend on how the global supply chain responds to tensions in the Middle East, particularly around strategic oil transport routes.
Additionally, fluctuations in the Pakistani Rupee and government taxation policies—especially the Petroleum Levy and General Sales Tax (GST)—will also influence how much of the international price is passed on to local consumers.
