The federal government is set to implement a minor increase of Re0.81 per litre in petrol prices and a moderate decrease of Rs3.94 per litre in diesel prices, effective December 16, 2024.
These adjustments are based on the first 12 days of the current fortnight and reflect volatility in international oil markets, attributed to the recent political developments in Syria. Officials believe that if the situation in Syria stabilizes soon, petroleum prices could see a more significant reduction in the near future, the source said.
From December 16, the price of petrol is expected to rise to Rs252.92 per litre, up from the current Rs252.10 per litre. Meanwhile, high-speed diesel (HSD) is likely to see its price drop from Rs258.43 to Rs254.53 per litre.
In the last fortnightly review, the government had raised petrol prices by Rs3.72 per litre, increasing the rate from Rs248.38 to Rs252.10. Similarly, diesel prices were hiked by Rs3.29 per litre, moving from Rs255.14 to Rs258.43.
Impact of Price Changes
Petrol is predominantly used in private transportation, including small vehicles, rickshaws, and motorcycles. Any increase in petrol prices disproportionately affects middle- and lower-middle-income groups, who rely heavily on petrol for daily commuting.
High-speed diesel, on the other hand, plays a critical role in the transport and agriculture sectors. It powers heavy goods transport vehicles, buses, trains, and agricultural machinery like tractors, tube wells, and threshers. Changes in diesel prices often lead to inflationary pressure, as transportation costs for vegetables and essential commodities rise, directly affecting consumer prices.
Market Context
The proposed changes come at a time when crude oil and petroleum products are abundant in the international market, but demand remains subdued. Experts indicate that further price adjustments could follow, depending on international market dynamics and geopolitical stability.
The new rates, set to take effect on December 16, will directly impact household budgets, especially for those reliant on petrol and diesel. The transport and agricultural sectors, in particular, will feel the effects of diesel’s price reduction, potentially alleviating some inflationary pressures.
