Rising tensions surrounding the Strait of Hormuz have once again rattled global energy markets, prompting the Pakistani government to review how petroleum prices are determined.
With international crude oil prices climbing sharply, authorities are considering shifting from periodic fuel price revisions to a daily pricing mechanism.
The proposal emerged during a high-level meeting of the Petroleum Price Reform Committee, chaired by Federal Minister for Petroleum Ali Pervaiz Malik, as officials assessed the impact of global market volatility on Pakistan's fuel pricing system.
Global oil prices surge
Escalating tensions between the United States and Iran have fueled fresh uncertainty in international oil markets, with concerns growing over the possible closure of the Strait of Hormuz — one of the world's most critical oil shipping routes.
As a result, international crude prices have risen significantly in just a few days. US crude oil has climbed to around $82 per barrel, while Brent crude has reached approximately $84 per barrel. Only recently, these benchmark prices were hovering near $68 and $71 per barrel, respectively.
The sharp increase has raised fears that oil-importing countries, including Pakistan, could face higher fuel costs in the coming weeks.
Daily petroleum price determination
Against the backdrop of volatile global markets, the Petroleum Price Reform Committee discussed multiple options for reforming Pakistan's petroleum pricing mechanism.
One of the key proposals under consideration is determining petroleum prices on a daily basis instead of the existing periodic system. The committee's recommendations will be submitted to Prime Minister Shehbaz Sharif, who will make the final decision on any changes to the pricing framework.
The committee also recommended that OGRA upload petroleum price data on its website every day to improve public access to pricing information.
According to the official statement issued after the meeting, participants agreed that the Petroleum Price Stabilization Fund should operate under a rules-based mechanism to ensure greater consistency and predictability.
The meeting also reached consensus on the digitalization of Pakistan's oil supply chain, with members emphasizing the need to improve transparency throughout the petroleum sector.
Ali Pervaiz highlights global challenges
Federal Minister for Petroleum Ali Pervaiz Malik said the renewed uncertainty surrounding the Strait of Hormuz has made the committee's work even more critical.
He stated that the committee is evaluating different methods of determining petroleum prices in line with rapidly changing global market conditions, particularly in light of the renewed concerns surrounding the vital shipping route.
Malik also noted that petrol prices in Pakistan remain lower than those in Bangladesh, Sri Lanka, and Turkey, while being comparable to prices in India.
Refinery policy amendments proposed
The petroleum minister said amendments have also been proposed to Pakistan's refinery policy to reduce the country's dependence on imported diesel.
According to him, strengthening domestic refining capacity is part of broader reforms aimed at making Pakistan's petroleum sector more resilient against external supply shocks.
Economic expert Syed Wasif Naqvi said that despite the uncertainty surrounding the Strait of Hormuz, implementing daily fuel price adjustments may not be practical immediately.
He explained that the government is likely to continue considering several factors, including international oil prices, the exchange rate, and petroleum levies, before making pricing decisions, rather than reacting to daily fluctuations alone.
PM to receive final recommendations
The Petroleum Price Reform Committee is expected to present its complete recommendations to the prime minister after evaluating various pricing models.
The government's final decision will determine whether Pakistan adopts a new petroleum pricing mechanism to better respond to rapid changes in international oil markets.
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