POL products: Aurangzeb signals price hike ahead

ISLAMABAD: Finance Minister Muhammad Aurangzeb on Thursday hinted at the possibility of a further hike in petroleum product prices, citing an upward trend in global oil prices amid the Middle East conflict, which is disrupting the crucial energy supply route.

Speaking during a meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla, the minister said the government is closely monitoring the evolving situation in the Middle East and taking urgent decisions to maintain fuel supplies in the country.

However, the Ministry of Finance issued a statement rejecting reports regarding a further hike in the petroleum prices.

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The statement said that Aurangzeb did not make any statement regarding a further increase in petroleum prices in Pakistan while briefing the Senate Standing Committee on Finance and Revenue. Reports circulating on some news channels in this regard are incorrect, the Finance Ministry said.

During the briefing to the Senate Standing Committee, the Finance Minister only informed the committee about the rising trend in global crude oil prices.

The finance minister did not make any statement about a further increase in petroleum product prices in Pakistan during his remarks.

When the committee members asked questions, did the International Monetary Fund (IMF) raise concerns about the external financing gap? The minister refuted the claims. However, he admitted that a Middle East conflict lasting weeks would affect everything, including inflation, domestic revenue, the current account balance, and remittance inflows.

Responding to concerns, Aurangzeb said Pakistan is not directly involved in the conflict but acknowledged that prolonged regional instability could impact inflation, external financing, remittances, and the current account balance.

The Committee received a detailed briefing on the government’s preparedness and contingency measures to ensure supply stability and macroeconomic resilience amid the ongoing global tensions affecting energy markets.

Aurangzeb informed the Committee that the government has adopted austerity and energy conservation measures to create sufficient fiscal space to absorb potential increases in global oil prices. It was further stated that the Prime Minister has constituted a high-powered committee, headed by the Finance Minister, to monitor the evolving situation daily and recommend necessary policy responses.

Members raised concerns about increases in oil prices on existing stocks and sought clarity regarding the beneficiaries of such adjustments. The Committee urged the government to transparently explain market constraints before implementing price regulations.

Aurangzeb said a ministerial committee formed by the prime minister is holding daily meetings to monitor petroleum prices and supply disruptions. “The regional situation is changing rapidly, and decisions regarding petroleum purchases must be taken immediately,” he told the committee.

Petroleum Minister Ali Pervaiz Malik revealed that Qatar has declared force majeure due to the ongoing conflict, resulting in a suspension of LNG shipments to Pakistan. According to the minister, an LNG cargo that previously cost around USD 25 million is now being quoted at nearly USD 100 million in the international market.

The committee was further informed that Pakistan currently has five oil refineries, most of which are outdated. They added that Saudi Arabia is providing crude oil to Pakistan at discounted rates, offering some relief. However, supply challenges persist, as shipping costs have surged—from about USD700,000 previously to nearly USD7 million per cargo.

Malik told the committee that the government had increased fuel prices by Rs 55 per litre, based on existing stocks, to ensure continuity of supply. He warned that if prices had not been adjusted, oil marketing companies might have stopped imports due to rising costs, which could have led to severe shortages.

“Oil imports take nearly 20 days to reach Pakistan. If prices had not been increased immediately, companies would have been unable to import fuel, and the country could have faced a dry-out situation,” he said. Malik also cited examples from other countries, noting that fuel rationing in Sri Lanka and Bangladesh had led to unrest and attacks on fuel depots.

He apprised the committee that oil price determination is done as per the average Platts benchmark prices, and there has been no change to the price determination formula. He also informed that the Strait of Hormuz is choked and vessels have to take a longer route. He further highlighted a fourfold increase in premiums and high insurance costs due to the conflict.

??The State Minister for Finance and Revenue explained that the recent oil price hike was taken to protect the oil supply chain. He further elaborated that, under the mechanism, the Oil Marketing Companies (OMCs) incur both profits and losses on the stocks they maintain.

During the meeting, Senator Farooq H. Naek criticised the increases in petroleum prices, arguing that the burden was being placed on the poor. “Israel fired missiles at Iran, and the government fired a petrol missile at the people of Pakistan,” he remarked.

The committee was also informed that LPG imports from Iran are continuing and have increased compared to earlier levels, while no immediate proposal is under consideration to raise LNG prices domestically. The committee was further informed that gas is being supplied only for DAP.

The Finance Minister and the Petroleum Minister told members that the Prime Minister has directed that no additional burden should be placed on the public. After reviewing the global market, the new prices of petroleum products will be announced on Friday. Efforts will be made to ensure that the public does not face an additional burden.

The Petroleum Minister said that, in accordance with the Prime Minister’s instructions, they are trying to keep prices under control. The government will review global oil prices again on Friday (today) before making any further decision regarding petroleum product prices. Mandviwalla warned that if the conflict persists, petrol prices could potentially surge to Rs500 per litre, urging the government to carefully manage the crisis.

Aurangzeb said that Pakistan had achieved economic stability after significant efforts, and the government is working with international partners and bilateral allies to mitigate the potential economic fallout from the ongoing regional tensions.

Copyright Business Recorder, 2026