Petroleum pricing: Only hard choices remain

Business Recorder commentary said renewed tension around the Hormuz situation is again testing Pakistan's petroleum pricing after a calmer stretch under daily pricing. Crude has climbed back towards USD100 per barrel, and end-product prices have jumped by double digits on several days, some in long upward runs. The writer argued that the seven-day rolling average can only soften sharp moves for so long before the changes reach the pump.

A proposal to lower the HSD benchmark towards USD30 per barrel is circulating, but the government has stayed silent and refineries have objected. The article described taxation as the larger constraint, since the combined petroleum levy and Climate Support Levy comes to Rs85 per litre on both petrol and HSD. Cutting it would be hard to reconcile with an IMF programme review under way in Islamabad and with climate-linked commitments under the Resilience and Sustainability Facility.

The third option is keeping the levy and granting a subsidy through the Petroleum Differential Claim mechanism, as Pakistan did in 2022 and at the start of the current conflict. The writer called a blanket subsidy costly and poorly targeted, noting that BISP cash support is not a fuel subsidy and that no obvious mechanism links the two. Concluding that all three options are imperfect, the commentary said the current episode is pushing that trade-off into the open.