Business
Govt to absorb future fuel price hikes amid Middle East crisis: Ali Pervaiz Malik | The Express Tribune
Says he believes that within a reasonable time, there will not be much change in prices
Petroleum Minister Ali Pervaiz Malik asserted on Tuesday that there would be no further increases in petroleum prices as the government has resolved to absorb the impact of any future increase in the international market due to the Mideast conflict.
Last week, the government announced an increase of Rs55 per litre in petrol and diesel prices following a surge in petroleum costs amid the ongoing Middle East crisis. The closure of the Strait of Hormuz has severely disrupted supply lines across the region, affecting fuel availability and prices globally.
Prime Minister Shehbaz Sharif on Monday announced austerity measures, acknowledging that petrol prices were expected to rise internationally in the coming days. However, the premier assured the public that the government would strive to shield them from the full burden of these increases.
Read: OGRA dismisses reports of Rs73 petrol, Rs84 diesel hike as ‘completely baseless’
Speaking in an interview on private television programme ‘Capital Talk’, Malik Defended the recent price hike caused by global fluctuations and market volatility, adding that the substantial increase was passed on to the public due to unavoidable circumstances but he that larger changes were unlikely in the coming days.
“The prime minister decided that after this increase, he will do everything possible to ensure that if any future increase occurs, it will be buffered through austerity measures, conservation efforts, budget contingencies or taxation measures. I believe that within a reasonable time, there won’t be much change in prices,” Malik said.
He further emphasised that the government had resolved to absorb the impact to prevent additional hardship for the public while maintaining steady fuel supplies.
Malik described the situation as extraordinary and said efforts had been made to ensure that people did not face supply difficulties.
“We had tried to build reserves, especially for gas, but after the closure of the Strait of Hormuz, we had to handle things differently. That is why Pakistan entered the crisis in a comparatively better way,” he said.
The minister added that the duration of the crisis remained uncertain. “It means we have to prepare ourselves for a test match, and whatever reserves we have, we must try to extend them and maintain the supply line.”
Also Read: Govt expands austerity drive as fuel prices rise and global oil markets turn volatile
Responding to criticism from Khyber-Pakhtunkhwa Chief Minister Sohail Afridi over the recent hikes, Malik said the chief minister was engaging in politics but urged him to propose alternatives. “People want to know what would have been done if prices were not raised. There should be some alternative arrangement for that too,” he remarked.
Addressing claims by financial experts about recent drops in petroleum prices, Malik cautioned the public against being misled. He described the current situation as difficult but expressed confidence that Pakistan would overcome the crisis.
“Together, we will overcome this difficult period,” he said, hoping the crisis would end soon, noting its impact extends beyond fuel to imports and remittances.
On rumours regarding gas shortages, the minister clarified that Pakistan would not face problems this month thanks to two cargoes that arrived before the war began. However, he warned that if the conflict prolonged, the government would need to source additional supplies or adjust distribution to conserve gas.
Oil prices jumped on Tuesday as Donald Trump weighed Iran’s latest proposal to end the war.
The US president is unhappy with the latest Iranian proposal, a US official said on Monday. Iranian sources disclosed that Tehran’s proposal avoided addressing its nuclear programme until hostilities cease and Gulf shipping disputes are resolved.
Trump’s displeasure with the Iranian offer leaves the conflict deadlocked, with Iran shutting shipping flows through the Strait of Hormuz, which typically carries supply equal to about 20 per cent of global oil and gas consumption, and the US keeping in place its blockade of Iranian ports.
Brent crude rose to $108.13 per barrel, hovering near a three-week high, while US West Texas Intermediate went up to $96.48.
Both benchmarks are well above pre-war levels. Brent was trading at $72 before the US-Israeli war on Iran began on 28 February.
Asian stocks were broadly subdued at the opening. While MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.12 per cent, hovering near the record high it touched on Monday, Nikkei fell 0.5 per cent.
The S&P 500 eked out modest gains on Monday and was on course for a nearly 10 per cent gain for April. US stock futures were 0.1 per cent higher in Asian hours.
Indian shares are set to open lower on Tuesday, with GIFT Nifty futures pointing to the benchmark Nifty 50 opening below Monday’s close of 24,092.70. Both Nifty and Sensex snapped a three-session losing run on Monday, led by a rebound in technology stocks, but the broader momentum remained constrained by unresolved tensions around the Strait of Hormuz.
Elevated oil prices are a particular headwind for India, the world’s third-largest crude importer, heightening inflation risks, pressuring economic growth and widening the country’s import bill.
Foreign portfolio investors offloaded domestic stocks worth Rs 11.5bn ($122m) on Monday, extending their selling streak to a sixth straight session.
Vessel crossings showed signs of recovery over the weekend, according to the maritime intelligence firm Windward, but analysts warned increased movement was yet to translate into a surge in oil and gas flows.
Iran reportedly offered to end its blockade of the waterway without addressing its nuclear programme, passing the proposal to Washington through Pakistani mediators. But Mr Trump has made ending Iran’s atomic programme a condition for any deal.
Central banks are also in focus this week, with the Bank of Japan, the US Federal Reserve, the Bank of England, and the European Central Bank all due to announce policy decisions. All are expected to hold rates steady, but markets will be watching closely for signals about how policymakers plan to respond to the inflationary pressure from the war.
“The BOJ is likely to stay highly sensitive to market volatility,” Fred Neumann, chief Asia economist at HSBC, told Reuters. “Our base case remains one single 25 basis point hike this year in July, but a June rate rise becomes more likely if the Strait of Hormuz is still effectively closed after mid-May.”
Mumbai: RBI has required banks to report all foreign exchange derivative deals involving the rupee undertaken in India and globally by their entire group, including overseas branches, subsidiaries, and parent entities. This brings into view offshore trades that were earlier largely invisible. This applies to both OTC deliverable and offshore non-deliverable contracts, meaning even speculative offshore bets on the rupee must now be disclosed. Banks now must report detailed transaction data-size, counterparty, maturity, and structure-no later than two working days, though trades below $1 million and certain already-reported or internal hedging transactions are exempt.
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