Petroleum prices may decrease in the upcoming announcement due to a significant drop in global oil prices and the strengthening of the Pakistani rupee against the US dollar, according to Arif Habib Limited (AHL), a brokerage house.

In the next fortnightly pricing cycle starting on October 16, 2023, AHL predicts a reduction of Rs41 per litre for petrol and Rs19 per litre for diesel in local prices.

AHL’s projection is based on several factors. International oil prices have fallen considerably in the past week due to concerns about demand, a stronger US dollar, inflationary pressures, and increased oil supplies. 

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The prices of WTI, Brent, and Arab Light have dropped by approximately 9 per cent to 11 per cent compared to the previous fortnightly averages. International gasoline (MS) prices have plummeted by 15 per cent to $84.3 per barrel, while high-speed diesel (HSD) prices have dipped by 10 per cent to $110.6 per barrel compared to the previous fortnightly averages.

Additionally, the Pakistani rupee has appreciated by 2.7 per cent against the US dollar, standing at 283.87 compared to the previous fortnightly average of 291.65. 

AHL’s calculations, factoring in these price changes and the assumption of stable international prices and currency rates over the next 10 days, suggest that local petrol and diesel prices are expected to decrease by Rs41 per litre and Rs19 per litre starting on October 16, 2023.

AHL also mentioned that in the previous fortnightly pricing, there was an exchange rate adjustment of Rs11.9 per litre for MS and a negative adjustment of Rs2.8 per litre for HSD. 

Even assuming similar currency adjustments for MS and no adjustment for HSD in the upcoming fortnightly prices, AHL anticipates that MS and HSD prices will decrease by Rs28.6 per litre and Rs19.3 per litre, respectively.

In terms of inflation, AHL revised its October CPI inflation estimate to 27.5 per cent. Last week, the interim government announced a reduction of Rs8 per litre for MS and Rs11 per litre for HSD, resulting in new prices of 323.38 and 318.18 per litre for petrol and diesel, respectively, effective from October 1.