Pakistan’s federal government may fall short of its revised petroleum levy (PL) target of Rs 1,161 billion for FY 2024–25, primarily due to the escalating oil prices driven by geopolitical tensions — notably, Israel’s recent strikes on Iran.

On June 13, 2025, shortly after the attacks, international oil benchmarks surged. Petrol (MS) rose by $1.98 per barrel, from $71.81 to $73.79, while High-Speed Diesel (HSD) jumped $2.54, from $76.14 to $78.68 per barrel. Consequently, Pakistani motorists are expected to face price hikes of approximately Rs 4.38 per litre for petrol and Rs 5.02 per litre for HSD, effective June 16, 2025.

The premium on petrol increased from $77.19 to $79.35, while HSD’s premium remained unchanged at $3.25 per barrel, according to market data. The Energy Ministry has already submitted a proposal to the federal cabinet for fuel levy adjustments aligned with IMF conditions.

Domestic Price Implications

Domestically, the cost of petrol has risen from Rs 137.02 to Rs 141, a jump of Rs 3.98 per litre. Similarly, HSD prices increased from Rs 140.92 to Rs 145.58, an uptick of Rs 4.66 per litre. Additional customs duties are also expected:

• Petrol: from Rs 13.70 to Rs 14.10 per litre
• HSD: from Rs 14.20 to Rs 14.56 per litre

These figures exclude adjustments by Pakistan State Oil (PSO). Should these be applied, prices could climb even higher. The exchange rate, too, is inching up — from Rs 282.20 to Rs 282.49 per USD, further burdening import costs.

Collection Status & Shortfall Projections

For FY 2024–25, the original PL target was Rs 1,281 billion, later revised to Rs 1,161 billion. As of March 2025, only Rs 834 billion — around 71% of the revised estimate — has been collected. Experts now fear a shortfall in the FY 2025–26 target of Rs 1.4 trillion, owing to reduced consumption from rising prices.

To compensate, the government has lifted the Rs 60/litre PL cap, enabling it to collect Rs 18.02/litre on petrol and Rs 17/litre on HSD since March 16, 2025, through a presidential ordinance. According to an anonymous OGRA official, this could yield Rs 90 billion quarterly and up to Rs 300 billion annually, assuming current demand trends persist.

Despite the price pressures, Oil Marketing Companies (OMCs) reported a 10% year-on-year (YoY) increase in fuel sales in May 2025, reaching 1.53 million tons, marking a 5% month-on-month (MoM) rise as well.