Pakistan Revises Petrol Pricing to Offset Iran-US War Volatility

The Government of Pakistan revised the pricing formula for Motor Spirit (petrol) on October 30 to manage market volatility resulting from the Iran-US war. The new mechanism bases import prices on the actual cost of Pakistan State Oil cargo, or the most recent available cargo data, to ensure pricing reflects current costs.

To provide consumer relief, the government froze premiums, incidentals, and customs duties for local refineries at March 7, 2026 levels for a 30-day period. Refineries must deposit the difference between these frozen ex-refinery prices and higher actual import costs into the petroleum levy account. This arrangement is intended to reduce the Petroleum Development Levy for consumers, potentially lowering prices by Rs10 to Rs15 per litre, while the existing Rs80 per litre petroleum levy remains unchanged.

To ensure compliance, the Petroleum Division and the Oil and Gas Regulatory Authority now require refineries to submit daily sales reports and deposit records for verification. While the government aims to pass savings to the public, refinery sources claim the formula is politically motivated and could result in losses exceeding Rs30 per litre, leading them to seek a formal review.