The people of Pakistan are facing an unprecedented economic and inflationary crisis as fuel prices have been hiked for the third consecutive day under the government’s newly implemented daily price review system administered by the Oil and Gas Regulatory Authority (OGRA). In the latest revision effective September 10, petrol prices were abruptly increased by Rs 3.40 per liter, pushing the rate to a staggering Rs 367.75 per liter. Simultaneously, high-speed diesel witnessed a steep surge of Rs 6.72 per liter, bringing its retail cost to Rs 392.67 per liter. This relentless upward spiral has resulted in cumulative hikes of Rs 21.88 for petrol and Rs 14.62 for diesel in less than a week, following successive increases of Rs 12.90 on September 8 and Rs 5.58 on September 9 for petrol, alongside corresponding spikes in diesel rates.
Middle East Crisis and Global Crude Oil Surge Drive Shortages
The primary catalyst behind the compounding fuel crisis in Pakistan is the escalating geopolitical instability in the Middle East, which has severely disrupted crude oil supply chains and pushed international crude prices past the critical $100 per barrel threshold. Like several South Asian economies, Pakistan relies heavily on imported crude oil, making its domestic market acutely vulnerable to global price fluctuations. The skyrocketing import costs are exerting immense pressure on the nation’s fragile foreign exchange reserves, forcing authorities to continuously readjust retail tariffs to cope with international market realities.
IMF Bailout Conditions and Heavy Government Taxation
Compounding the external supply shocks, strict conditions mandated by the International Monetary Fund (IMF) under ongoing bailout packages have left the government with virtually no fiscal elbow room. Under the IMF’s rigid “full cost recovery” model, the Pakistani government is strictly prohibited from absorbing losses incurred by rising international energy prices or bearing subsidies out of public coffers. Consequently, OGRA is mandated to immediately pass on global tariff adjustments to domestic consumers without delay. With more than 70 percent of government tax revenues currently consumed by debt servicing on legacy foreign and domestic loans, authorities are levying massive petroleum development levies, customs duties, and taxes ranging between Rs 100 and Rs 114 per liter on diesel and petrol, transferring the entirety of the financial burden onto ordinary citizens.