Introduction: Pakistan Fuel Prices reduced
The Government of Pakistan has voted to lower the Pakistan fuel prices as at January 1, 2026 in an official announcement. The new fuel prices will persist within 15 days, which will be subject to change in the world oil price and exchange rates. We will decompose the new fuel prices below, compare them to the last year rates, discuss the effect of current dollar exchange rate, and compare them with the fuel prices of the neighboring South Asian countries.
Current Petrol & Diesel Prices in Pakistan
The revised fuel prices will be effective since January 1, 2026:
- Petrol: Rs 253.17 per liter (fell to 263.45)
- Diesel: Rs 257.08 per liter (considered down by 265.65)
The January 2026 petrol rates showed decline of 10.28 and 8.57 in diesel prices in Pakistan. The government regularly adjusts these prices according to the oil market situation in the world market and the country-related factors.
Comparison to the Prices of the last year.
The existing petrol and diesel rates are lower than those of last year:
- Petrol (January 2025): Rs 295.40 per liter
- Diesel (January 2025): Rs 289.00 per liter
As indicated, the prices of petrol, as well as those of diesel, have reduced by around Rs 42.23 and 31.92 respectively in April 2025 as compared to January 2025. This decline is also in line with the changes in global oil prices, which are one of the major determinants of local fuel prices.
The Crude Oil Prices Comparison.
To further understand the price reduction, it’s important to look at the international crude oil prices. The Pakistan fuel costs are directly affected by the global oil prices, because the country is dependent on foreign crude oil to supply its local fuel needs.
- Crude oil price (January 2025): Approximately, the price is going to be approximately 82 per barrel.
- Crude oil price (January 2026): Approximately, it is going to be around $74/per barrel.
The domestic fuel prices have been reduced as a result of the slight fall in prices of crude oil experienced in the last year. Though, it is worth mentioning that the world oil prices are usually unstable and can be affected by various factors, including the geopolitical ones, changes in supply and demand, and OPEC+ policies.
Effects of Dollar Exchange rate on Fuel Prices.
The variable price of Pakistani rupee (PKR) to the US dollar (USD) is the key determinant of the end-price of petrol and diesel in Pakistan. In the present scenario, the dollar exchange rate Pakistan is around 280 to 1 USD which is slightly better than the exchange rate of last year 290 to 1 USD.
The strength of the rupee has helped somewhat lower the impact of imported fuel costs, although other factors like local taxes and international crude oil prices also contribute to the overall cost structure.
Fuel price comparison in South Asia
Comparing the fuel prices in Pakistan with the South Asian one, we get the following:
As it will be observed, the fuel prices in Pakistan are higher than the ones of India and Bangladesh and lower than in Sri Lanka. It is worth noting that Afghanistan has the cheapest fuel prices in the region with Sri Lanka being the most expensive.
Key Observations:
India keeps the prices significantly low because of fuel subsidies provided by the state and the control of the government on the fuel prices.
The prices of fuel in the region have changed, but Sri Lanka still has higher fuel prices.
The fuel prices are the lowest in Afghanistan because they are subsidized and the local production costs less.
Conclusion
The recent reduction in petrol and diesel prices in Pakistan is primarily due to a decrease in global crude oil prices and a slightly stronger rupee. Although the price reduction is a partial relief in the short run, Pakistan fuel prices are still comparatively high than other neighbors in the South Asian region including India and Afghanistan.
The government will be keeping a check on the global market trends and exchange rate in order to fix the future prices. The updated fuel prices should be announced bi-weekly and the fuel prices revised after every 15 days as per the current prevailing conditions in the international market and domestic economy.
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