Covid-19 is changing the global economy rapidly and the petroleum sector has also seen its adverse effects on its products. Petroleum prices have decreased by a huge margin ever since the start of this pandemic. This reduction in prices has provided relief to the public in Pakistan. According to reports, petrol prices will reduce once again in June. Previously, the petrol prices were decreased by PKR 15 on 1st May 2020. In the month of June, it is expected that the price of petrol can drop by PKR 5 to 10. The new price of petrol will be around PKR 72 to 77.
The prices of other petroleum products besides petrol are also expected to decrease in June. It is expected that the price of diesel will be reduced by PKR 2. These price reductions have been suggested by the Oil and Gas Regulatory Authority (OGRA) to the government recently. The decrease in the prices is due to the lock-down implemented globally to ensure people stay at home. Therefore, there is less mobility over the past few months leading to reduced demand of petroleum products all over the world including Pakistan.
A decrease in the demand has crashed the prices of petroleum products to historically low levels. In the short run, a decrease in the price of petrol will lower the import bill for Pakistan and it will be cheaper for people to travel. In the long run, it can be problematic as a shortage of petroleum products can occur as it will be difficult to sell petroleum products at lower prices.
According to experts, a petroleum crisis is looming in Pakistan. This is because local refineries are facing difficulties to sell their inventory at low prices. PSO is able to import oil at a cheaper price compared to local oil refineries. Putting a freeze on the ex-refinery price for the month of June can help improve the situation and let refineries operate. A shortage of petroleum products can occur if local refineries are idle.
Stay tuned for more news-related content and drop your thoughts on the massive drop in the prices of petroleum products since the beginning of the Covid-19 lockdown.
