Govt cuts petrol, diesel prices by Rs1.97 per litre

• Petrol price cut from Rs299.50 to Rs297.53 per litre.
• Diesel price reduced from Rs311.47 to Rs309.50 per litre.
• New fuel prices take effect immediately following notification.

The federal government has announced a fresh reduction in fuel prices, cutting the rates of both petrol and diesel by Rs1.97 per litre with immediate effect.

Following the weekly review, petrol will now sell at Rs297.53 per litre, down from Rs299.50, while diesel has been brought down to Rs309.50 per litre from its previous level of Rs311.47, according to a notification issued by the Petroleum Division late Friday.

The cut marks the first change in retail fuel prices since 19 June, when the government slashed petrol and diesel rates by Rs74 and Rs67 per litre respectively, in what was one of the steepest reductions in recent years. 

That relief, announced by Prime Minister Shehbaz Sharif, came on the back of a sharp fall in international crude prices following the US-Iran peace agreement and the reopening of the Strait of Hormuz — a vital corridor for global energy shipments whose closure had earlier stoked fears of a supply crunch.

Prices had since held steady through two consecutive weekly reviews, even as the government quietly recalibrated the tax structure underpinning fuel costs. 

Levy structure revised again

Alongside the price review, the government has also adjusted the Petroleum Levy charged on both fuels.

The levy on petrol has been raised by Rs6.22 per litre, taking it from Rs64.14 to Rs70.36 per litre, while the levy on diesel has been reduced by the same margin, bringing it down from Rs77.04 to Rs70.82 per litre.

The Petroleum Levy on kerosene remains unchanged at Rs20.36 per litre.

A separate notification confirming the revised petroleum levy was issued alongside the price notification.

Kerosene price raised

In a separate move, the Oil and Gas Regulatory Authority (OGRA) has raised the price of kerosene by Rs4.09 per litre, taking it to Rs231.14 from its previous rate of Rs227.05. The increase, notified by OGRA, has come into effect from today.

On 2 July, the Petroleum Division doubled the Climate Support Levy on petrol and diesel from Rs2.50 to Rs5 per litre, while simultaneously trimming the Petroleum Levy by the same margin — a move designed to keep retail prices unchanged for consumers despite the shift in how the levies were apportioned.

This week's reduction, though comparatively modest, offers some further relief to households and businesses still adjusting to the sharp price swings seen over the past fortnight. Petrol remains the fuel of choice for commuters using motorcycles, rickshaws and smaller vehicles, meaning any downward movement is felt most directly by middle- and lower-income households reliant on it for daily travel.

Diesel, meanwhile, continues to carry outsized weight in Pakistan's inflation dynamics, given its dominant use in the transport and agricultural sectors — from heavy trucks and buses to tube wells, tractors and threshers. A cheaper diesel rate, even by a fraction, typically feeds through to freight and farming costs over time.

The government is expected to review fuel prices again in the coming week, in line with its usual schedule, with any further movement likely to hinge on the trajectory of international crude oil prices and the rupee's performance against the dollar.