Oil Sector Rejects Plan to Lower Diesel Price

For context, the Oil Firms Advisory Council (OCAC) has cautioned that another proposed change to the high-speed diesel (HSD) pricing formula could further hurt refinery operations and threaten planned investments in the sector.

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• The OCAC additionally stated the existing HSD pricing formula does not reflect current market premiums.
• It cautioned that an abrupt reduction in the HSD rate could create it challenging for refineries to book October cargoes at prevailing premiums.
• The council remarked the refining industry had continued to backing the administration during challenging periods but could not repeatedly absorb the financial impact of policy interventions.

In a September 8 letter to Energy Minister Ali Pervaiz Malik, the OCAC remarked the administration was considering lowering the HSD crack ceiling from US$41.89 per barrel to US$30 per barrel. The move could reduce the HSD cost by concerning Rs. 18 to Rs. 20 per liter, it remarked.

In practice, the council remarked the change would come after a number of revisions to the HSD pricing mechanism in recent months, including the latest one introduced on Aug. 20, 2026. It pressed the administration to keep fuel pricing consistent and predictable. Pakistan Exchange Firms' Dollar Sales Rise 30% in August.

Meanwhile, the OCAC additionally stated the existing HSD pricing formula does not reflect current market premiums. While the Aramco premium for October is minus US$2 per barrel, the council remarked cargoes are being offered and booked at premiums of US$15 to US$20 per barrel.

It cautioned that an abrupt reduction in the HSD rate could create it challenging for refineries to book October cargoes at prevailing premiums. This could create high premium cargoes uneconomical and force refineries to reduce throughput instead of increasing production ahead of seasonal demand.

Meanwhile, the council remarked the refining industry had continued to backing the administration during challenging periods but could not repeatedly absorb the financial impact of policy interventions. Govt Invites Bids for 750, 000 Tonnes of Wheat Imports.

It remarked refineries were additionally preparing to invest regarding US$5 billion to US$6 billion in upgrading projects under the Brownfield Refining Policy, making policy consistency and pricing stability notable for these investments.

In practice, the OCAC additionally highlighted the pending rise in oil marketing firm margins. It remarked OMC margins were last revised in September 2023 despite continued inflation, rising operating and compliance costs and climbed regulatory requirements.

Notably, the council again requested the immediate notification and implementation of the pending Rs. 1.22 per liter growth in OMC margins. It pressed the administration to ensure consistency and continuity in the fuel pricing formula in the interest of the downstream oil industry. Stay Connected with ProPakistani.

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For now, oil Sector Rejects Plan to Lower Diesel Price remains the part of the story worth watching, and further updates are likely as more details are confirmed.