Petrol-diesel prices: Taxes and margins widen cost gap

According to official documents, the retail price of petrol is currently Rs391.30 per litre, compared with its underlying cost of Rs254.96. This represents

ISLAMABAD: The gap between the actual cost and retail prices of petroleum products has widened further, with taxes, levies and various margins adding more than Rs100 per litre to the prices paid by consumers.

According to official documents, the retail price of petrol is currently Rs391.30 per litre, compared with its underlying cost of Rs254.96. This represents a difference of Rs136.34 per litre.

The documents show that taxes, levies and industry margins account for Rs134.44 per litre of petrol, while an additional Rs1.90 is attributed to exchange-rate adjustment.

Petrol carries an Rs80 petroleum levy, Rs5 climate support levy and Rs23.68 customs duty per litre. Other components include an inland freight equalisation margin of Rs7.91, an oil marketing companies’ margin of Rs7.87 and a dealers’ margin of Rs9.98.

Meanwhile, high-speed diesel has an underlying cost of Rs285.85 per litre, while its current retail price stands at Rs408.53. The difference of Rs122.68 per litre reflects the taxes, levies and margins included in its final price.

Moreover, Global oil prices climbed sharply on Monday as hopes for a quick breakthrough in US-Iran peace efforts weakened, keeping concerns over Middle East supply disruptions in focus.

Brent crude futures gained more than 3% during early trading, rising $3.43, or 3.29%, to $107.75 a barrel. US West Texas Intermediate crude also advanced, increasing $2.14, or 2.32%, to $94.55 a barrel.

The latest rise followed US President Donald Trump’s rejection of an Iranian proposal aimed at resolving the conflict and facilitating the reopening of the Strait of Hormuz, a key route for global energy shipments.

Iran had presented the proposal during the United Nations General Assembly in New York and said it was delivered to the US through Qatari mediators. Trump rejected the proposal over the weekend but later indicated that American negotiators were expected to hold further discussions with Iran during the week.

Market analysts said the rejection reduced expectations of an immediate diplomatic breakthrough, although negotiations remained possible. Investors are closely monitoring developments around the Strait of Hormuz because any prolonged disruption could affect global crude supplies and shipping costs.

Tensions also remain high in the wider region. A Saudi-led coalition in Yemen said it had intercepted two ballistic missiles and two drones launched by the Iran-backed Houthis towards Saudi Arabia.

Oil markets have shown mixed movements in recent sessions. Brent gained around 0.4% last week, while WTI fell 7.9% amid concerns over a possible US restriction on diesel exports.

US diesel prices have reached record levels, raising concerns about inflation and prompting discussion over possible limits on exports. Analysts said such restrictions could reduce supplies available to international markets and push up prices in regions that depend on US refined fuel.