ISLAMABAD: The ongoing conflict between Iran and Israel is beginning to affect Pakistan’s economy, particularly the energy sector. The federal government now faces a serious risk of missing its petroleum levy collection target of Rs. 1,161 billion for the current fiscal year due to rapidly rising global oil prices.
According to official sources, global crude oil markets responded immediately after Israel launched airstrikes on Iran. Within hours, the price of crude oil surged from $71.81 to $73.79 per barrel, while high-speed diesel (HSD) rose from $76.14 to $78.68 per barrel.
Experts now estimate that from June 16, 2025, petrol prices in Pakistan may increase by Rs. 4.38 per litre, while diesel could see a hike of Rs. 5.02 per litre. This would raise the cost of petrol from Rs. 137.02 to Rs. 141, and diesel from Rs. 140.92 to Rs. 145.58 per litre.
The Pakistani rupee is also expected to depreciate, with the average exchange rate projected at Rs. 282.49 per USD, which will further inflate import costs and fuel prices.
These estimates exclude adjustments from Pakistan State Oil (PSO). If PSO is allowed to pass on further costs, fuel prices could increase even more. From July to March (first nine months of FY 2024–25), the government has collected only Rs. 834 billion in petroleum levy revenue—just 71% of the revised annual target.
The original target was Rs. 1,281 billion, later revised down to Rs. 1,161 billion. For the next fiscal year (2025–26), the government has set an even more ambitious target of Rs. 1.4 trillion, which now seems uncertain under current geopolitical conditions.
After March 16, 2025, the government abolished the Rs. 60 per litre petroleum levy cap through an ordinance and imposed an additional levy of Rs. 18.02 per litre on petrol and Rs. 17 on diesel. According to an OGRA official, this additional levy could bring in an extra Rs. 90 billion per quarter, amounting to Rs. 300 billion annually.
Meanwhile, oil marketing companies (OMCs) reported a 10% year-on-year and 5% month-on-month increase in sales during May 2025, totaling 1.53 million tonnes.
The Oil and Gas Regulatory Authority (OGRA) is currently analysing international price trends, exchange rate data, and other factors from the first 15 days of June. Based on this data, the Ministry of Finance will announce the revised fuel prices on June 15.
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