Pakistan Ends Fuel Subsidies as Global Oil Prices Drop

The Government of Pakistan discontinued its fuel subsidy program for motorcyclists, small-scale farmers, and public and goods transport operators on June 22, 2026. Prime Minister Shehbaz Sharif approved the move following a decision by the National Steering Committee on Fuel Subsidy, which was chaired by Deputy Prime Minister Ishaq Dar.

Pakistan originally implemented the subsidies after a US-Israeli strike on Iran in February 2026 caused the closure of the Strait of Hormuz and sent global oil prices surging. This volatility pushed domestic petrol prices to a record Rs458.40 per litre in April.

The decision to withdraw the support comes as a peace agreement between the United States and Iran led to a sharp decline in international oil prices. This shift allowed the Pakistani government to implement recent domestic price cuts of Rs74 per litre for petrol and Rs67 per litre for diesel, rendering the subsidy program unnecessary.