Petrol prices set to drop in upcoming fuel review

June 04, 2026 (MLN): Consumers are likely to experience mixed fortunes in the upcoming petroleum price review, as petrol prices are projected to decrease slightly, while High-Speed Diesel (HSD) prices are on track for a major surge due to rising international oil costs.

According to the latest working estimates based on global oil market data, petrol (PMG) prices are expected to drop by around Rs7-Rs8 per litre. Conversely, the price of HSD is projected to witness a substantial spike of Rs27-Rs28 per litre for the upcoming pricing period.

Currently, petrol is available at retail across the country at Rs381.78 per litre, while HSD is being sold at Rs380.78 per litre.

If the government decides to pass on the impact of international price movements and exchange rate adjustments without altering current taxes and margins, the new retail price of petrol will drop to around Rs374 per litre. Meanwhile, the price of diesel will jump significantly to an estimated Rs409 per litre.

The Pricing Drivers

 The divergent paths of the two primary fuels stem directly from international market trends during the current pricing cycle.

Motor gasoline is poised to see further relief due to a slide in global costs.

Global Cost Drop: The Free on Board (FOB) price per barrel dropped from $133.76 to $130.64, registering a variance of -$3.12.

Refinery Impact: This shift has pulled down the provisional product cost per litre by Rs5.53, moving from Rs234.45 to Rs228.92.

Net Expected Relief: When factoring in a -$1.98 variance from previous PSO adjustments, the derived ex-refinery price shows a total drop of Rs7.51 per litre. Barring aggressive changes to exchange rate adjustments or duties before the final review, this drop is highly likely to reflect at the pumps.

Conversely, the relief window for HSD appears to be closing rapidly as international prices stage a robust recovery.

Global Cost Surge: The FOB price for diesel surged by $12.20 per barrel, climbing from $149.69 to $161.89, driven by an expansion in both the basic product cost (CnF) and the premium.

Refinery Impact: Locally, this pushes the base product cost per litre up by Rs21.31 (jumping from Rs262.36 to Rs283.67).

Additional Pressures: Compounding the increase is a Rs7.26 per litre spike in custom duties.

Net Expected Increase: Consequently, the derived ex-refinery price for HSD shows a substantial upward variance of Rs27.90 per litre.

The final retail prices will depend heavily on whether the government retains the current Petroleum Levy (PL), inland freight equalization margin (IFEM), and oil marketing companies' margins. Currently, the PL stands at Rs91.34 per litre on petrol and Rs68.93 per litre on diesel.

Any decision by the government to absorb a portion of the diesel price hike by adjusting the petroleum levy upward or downward could alter the final impact on consumers at the pumps.

The formal notification detailing the final consumer prices will be issued tomorrow by the Ministry of Finance after a final review by the Oil and Gas Regulatory Authority (OGRA).

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