Arif Habib Limited (AHL), a prominent brokerage firm, has forecasted a substantial reduction in petroleum prices for Pakistan. AHL predicts that motorists and consumers in the country can expect a “big relief” at the pump, with petrol prices anticipated to decrease by Rs41 per litre and diesel prices by Rs19 per litre on October 16.
The forecast by AHL also highlights a potential 92 basis point decrease in inflation rates, bringing it down to 27.5%. This decrease is attributed to the fluctuating prices of commodities and currency both within Pakistan and across the globe.
AHL’s forecast is grounded in recent trends in international oil prices, which have seen a significant decline over the past week due to multiple factors including concerns about global demand, a stronger US dollar, inflationary pressures, and rising oil supplies.
The Finance Ministry, in its latest bi-weekly announcement of fuel prices, provided some initial relief to the inflation-burdened populace by reducing petrol prices by Rs8 for the upcoming fortnight, marking the first such reduction in two-and-a-half months. Diesel prices were also slashed by Rs11, bringing the new price of diesel to an estimated Rs318.18 per litre.
AHL’s forecast specifically references the price movements of key oil benchmarks such as West Texas Intermediate (WTI), Brent, and Arablight, which have all witnessed declines ranging from 9% to 11% compared to the previous fortnightly average prices.
“The international price of gasoline (Motor Spirit – MS) plummeted by 15% to USD 84.3 per barrel, compared with the previous fortnightly average of USD 99.3 per barrel. Similarly, international prices of high-speed diesel (HSD) saw a dip of 10% to USD 110.6 per barrel compared with the previous fortnightly average of USD 122.3 per barrel,” the AHL statement noted.
Furthermore, AHL cited the recent appreciation of the Pakistani rupee against the US dollar, which is expected to contribute significantly to the anticipated decline in fuel prices.
The brokerage firm stated, “PKR has appreciated by 2.7% to 283.87/USD compared to the last fortnightly average of 291.65/USD.”
Taking into account the factors mentioned above, including exchange rate adjustments in the last fortnightly prices of Motor Spirit (MS) and high-speed diesel (HSD), which were Rs11.9 and Rs-2.8 per litre, respectively, AHL anticipates that if international prices and currency exchange rates remain stable for the next 10 days, local petrol and diesel prices are expected to decrease by Rs41 and Rs19 per litre in the next bi-weekly pricing update.
The company further explained, “Even assuming the same currency adjustment for MS and no adjustment for HSD in the upcoming fortnightly prices, the prices of MS and HSD are still expected to drop by Rs28.6 and Rs19.3 per litre, respectively.”
This forecast by AHL has brought hope to consumers and businesses alike, as they look forward to potential relief from high fuel costs and inflationary pressures. It remains to be seen if the anticipated price reductions will materialize as predicted, but the outlook is undoubtedly optimistic for now.
