The caretaker government announced a substantial reduction in the price of petrol by Rs8 per litre, effective immediately. The revised petrol price now stands at Rs259.34 per litre, down from the previous rate of Rs267.34 per litre. However, the price of High-Speed Diesel (HSD) remains unchanged at Rs276.21 per litre.
Government of Pakistan has reduced Petrol price by 8 rupees, whereas price of High Speed Diesel has been maintained. pic.twitter.com/wIhfAVBW5t
— Ministry of Finance, Government of Pakistan (@Financegovpk) January 15, 2024
International Oil Market Reacts to Middle East Conflict
Oil prices experienced a dip in the international market on Monday, driven by limited disruption to crude output from the Middle East conflict. Profit-taking ensued after oil benchmarks saw a 2% gain the previous week. According to Reuters, Brent crude futures declined by 49 cents to $77.80 a barrel, while US West Texas Intermediate crude lost 51 cents, settling at $72.17.
Factors Influencing Oil Prices
The recent events in the Middle East, with tanker owners avoiding the Red Sea and altering courses after US and Britain’s strikes against Houthi targets in Yemen, have contributed to market uncertainties. However, several factors, including the downward trends in global oil prices, an improved exchange rate of the US dollar against the rupee (last closed at Rs280.24), and predictions from energy experts, indicate a potential decrease in oil prices.
Experts’ Insights on Future Oil Prices
Energy experts had earlier forecasted that crude oil prices were likely to remain low in the first half of 2024 due to lower demand and increased oil output. Saumil Gandhi, senior analyst of commodities at HDFC Securities, predicted a Brent crude price ranging between $60-65 per barrel (lower band) and $85-90 per barrel (upper band).
OPEC+ Decision and Geopolitical Tensions
In December, the Organization of Petroleum Exporting Countries and their allies (OPEC+) collectively agreed to cut output by nearly one million barrels per day by early 2024. This decision resulted in a total production cut exceeding 2.2 million barrels per day, approximately 2% of the world’s supply. Experts cautioned that geopolitical tensions in the Middle East remained a potential factor that could drive oil prices upward.
