Govt revises petrol pricing formula amid Iran-US tensions

The federal government has revised the petrol pricing mechanism amid tensions between Iran and the United States, directing oil refineries to implement a new formula approved by the federal cabinet.

In letters issued to refineries, the Petroleum Division outlined the revised mechanism, which was approved by the cabinet on Friday, Business Recorder said in a report.

Under the new formula, petrol’s import price will be determined based on the actual import cost of the relevant Pakistan State Oil (PSO) cargo.

If the actual cost is unavailable when daily prices are calculated, the premium, additional costs and customs duty applicable to the last available cargo will be used as the benchmark.

The revised mechanism allows refineries to calculate petrol’s ex-refinery price over the next 30 days by keeping the premium, incidentals and customs duty at the levels prevailing on March 7, 2026, before the war began.

Refineries will be required to surrender the difference between the import price calculated under the first provision and the ex-refinery price determined under the second to the government under the Petroleum Levy account head C03901.

The financial benefit resulting from this adjustment will be passed on exclusively to motor spirit (MS), or petrol, consumers through a corresponding reduction in retail prices.

To ensure implementation of the cabinet’s decision, all refineries have been directed to deposit the differential petroleum levy in accordance with the Oil and Gas Regulatory Authority’s (OGRA) price notifications and petroleum levy notifications issued from time to time.

Refineries will also be required to submit daily reports of domestic petrol sales, along with CPRs and payment challans, to the Petroleum Division and OGRA for verification and reconciliation.