The federal government on Tuesday reduced the prices of petrol and high-speed diesel (HSD) by Rs3.39 and Rs4.07 per litre, respectively, for August 5.

According to a notification issued by the Ministry of Petroleum, the price of petrol has been fixed at Rs328.56 per litre, while HSD will now cost Rs385.86 per litre.

The latest revision comes a day after the government reduced petrol by Rs4.08 and HSD by Rs2.45 for Aug 4.

READ: Govt reduces petrol price by Rs4.08, HSD by Rs2.45 for August 4

On July 17, the government introduced a daily fuel price review mechanism amid volatility in global oil prices following renewed hostilities in the Middle East.

The daily fuel prices are based on a seven-day average of international market rates to align with international standards.

According to the Pakistan Economic Survey 2024-25, petroleum products constitute one of the country’s largest import categories, making the economy highly vulnerable to changes in global crude oil prices. Domestic refineries satisfy only part of national demand, while the remainder is met through imports of crude oil and refined petroleum products. Consequently, every increase in international oil prices raises Pakistan’s import bill, exerts pressure on foreign exchange reserves, and contributes to inflation.

Pakistan previously exercised significant government control over petroleum pricing through subsidies and administrative interventions. While these measures temporarily protected consumers, they imposed substantial fiscal costs. During periods of elevated global oil prices, successive governments delayed passing price increases to consumers, creating financial pressures for oil marketing companies, refineries, and the national budget. Large fuel subsidies widened fiscal deficits, increased public borrowing, and weakened macroeconomic stability.

Global geopolitical developments continue to pose significant risks. International oil prices are influenced by decisions taken by OPEC+, conflicts in the Middle East, sanctions on oil-producing nations, and disruptions in critical shipping routes such as the Strait of Hormuz and the Red Sea. Any interruption in these supply chains can immediately increase crude oil prices and freight costs. Since Pakistan imports the majority of its petroleum requirements, these developments quickly translate into higher domestic fuel prices.