ISLAMABAD: The decision to increase the petroleum products prices’ have been delayed as Prime Minister Shehbaz Sharif, the person to give the final nod on such recommendations, was not in the country, sources said.
The government has assured the International Monetary Fund to “increase the petroleum development levy (PDL) up to Rs50 till January”. Such a promise was made when Pakistan received the letter of intent (the document outlining the general plans of an agreement).
PDL of around Rs10 on petrol and Rs5 on diesel was supposed to be increased in the first week of this month, sources. But, PM Shehbaz’s trip to Samarkand, Uzbekistan to attend the Shanghai Cooperation Organisation (SCO) summit delayed the decision.
Petrol prices are increased on the Oil and Gas Regulatory Authority summary. The recommendations are put forward in view of the international market prices and the PDL.
Fuel is being sold at Rs233.91 in Pakistan after an Rs6.72 increase on August 15. However, the federal government reduced high-speed diesel and kerosene rates by slight margins in view of varying oil costs in the international market and exchange rate variation.
The PTI and many journalists have expressed that the government’s decision to increase fuel prices would prompt the people to go against it. But, there have been some people calling for making careful statements on such developments as Pakistan was trying to bring its current account in balance.
Moreover, the country was also dealing with the increasing rates of the dollar amid the flood situation and the rising greenback demand for import payments. Some currency experts have urged the government to control the grey market which has come to light after the dollar’s apparent smuggling to Afghanistan and Iran.
Read more: Why is the value of the dollar increasing this time?
They have also demanded of the government to ease policies for currency trade.
Oil extends losses on recession fears
Brent crude futures fell 22 cents, or 0.2%, to $90.62 a barrel as of 0052 GMT after sliding 3.5% to a one-week low in the previous session, Reuters reported.
US West Texas Intermediate (WTI) crude futures lost 25 cents, or 0.3%, to $84.85 a barrel, after tumbling 3.8% in the previous session.
“Crude oil fell as the market’s focus returned to the worsening economic backdrop,” ANZ commodities analysts said in client note.
Both benchmarks are headed for a third consecutive weekly loss, hurt partly by a strong US dollar, which makes oil more expensive for buyers using other currencies. The dollar index ticked down on Friday but held near last week’s high above 110.
The market was also rattled this week by the International Energy Agency’s outlook for almost zero growth in oil demand in the fourth quarter due to a weaker demand outlook for China.
“Oil fundamentals are still mostly bearish as China’s demand outlook remains a big question mark and as the inflation-fighting Fed seems poised to weaken the US economy,” OANDA analyst Edward Moya said in a note.
Analysts said sentiment suffered from comments by the US Department of Energy that it was unlikely to seek to refill the Strategic Petroleum Reserve until after fiscal 2023.
On the supply side, the market has found some support on dwindling expectations of a return of Iranian crude, as Western officials played down prospects of reviving a nuclear accord with Tehran.
Commonwealth Bank analyst Vivek Dhar said that supported the bank’s view that oil markets will tighten by the end of the year and Brent will return to $100 a barrel in the fourth quarter.
