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 Rs3-Rs4 per litre. Conversely, the price of HSD is projected to witness a substantial spike of Rs34-Rs35 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 Rs378 per litre. Meanwhile, the price of diesel will jump significantly to an estimated Rs415 per litre.

The Pricing Drivers

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

 For petrol, the import data reveals a downward trend. The cost and freight (CnF) price per barrel decreased from $113.42 to $112.51, reflecting a drop of $0.91.

Coupled with a stable average US Dollar conversion rate of Rs278.61 (down slightly from Rs278.66), the expected ex-refinery price of petrol is calculated to slide to Rs260.33 per litre from the current Rs263.95 per litre.

On the flip side, the international diesel market has faced severe upward pressure. The CnF price for HSD escalated dramatically by $11.05 per barrel, climbing from $135.88 to $146.93. Additionally, the premium on HSD rose by $5.69 per barrel to $19.50.

This dual impact expanded the free-on-board (FOB) price by $16.74 per barrel to $166.43, translating into an increase of Rs29.29 per litre in raw product cost alone.

After accounting for a Rs6.22 per litre increase in custom duty (rising to Rs30.61 per litre based on higher import values), the ex-refinery price for diesel is set to jump from Rs288.36 per litre to Rs323.17 per litre, a net variance of Rs34.81 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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