Pakistan Raises Fuel Prices Amid Global Oil Shock, Then Cuts Petrol Levy After Backlash

Lead

Pakistan has raised domestic petrol and high-speed diesel (HSD) prices by 43% and 55%, respectively, in response to spiking global oil prices amid the U.S.-Israel war on Iran, according to multiple reports. The increase, announced on Thursday, April 3, 2026, was followed within hours by a partial reversal: Prime Minister Shehbaz Sharif cut the petrol levy by Rs80 per litre, bringing the price down to Rs378 per litre, as reported by The Hindu.

The price adjustments, which took effect immediately, were described by Petroleum Minister Ali Pervaiz Malik as "difficult and responsible" decisions made after national-level consultations, according to Dawn. The government also announced targeted subsidies for motorcycle owners, farmers, and transporters, along with early market closures to conserve energy.

Coverage Comparison

Reports from Dawn and The Hindu broadly agree on the key figures and the government's stated rationale. Both outlets attribute the price hike to global oil price shocks resulting from the U.S.-Israeli conflict with Iran, including the closure of the Strait of Hormuz, as noted in one Dawn report. The coverage also highlights the government's initial resistance to passing on the full impact of rising oil prices, which it had absorbed for weeks, costing the exchequer an estimated Rs129 billion, according to a Dawn editorial.

However, the outlets differ in emphasis. Dawn's reporting includes critical analysis of the government's handling of the crisis, describing the price increase as an "unavoidable correction" but also noting "political pressure and confusion in officialdom" after the prime minister's reversal. The Hindu's coverage focuses on the sequence of events, including the prime minister's midnight address and the relief measures for vulnerable segments.

A single Dawn report details the opposition's protest in the National Assembly, where a 90-point agenda was shelved as lawmakers shouted slogans and tore up copies of the agenda. This account is not mentioned in The Hindu's coverage.

Key Claims

• Price Increases: Petrol rose by Rs137.23 per litre (42.7%) to Rs458.41, while HSD rose by Rs184.49 per litre (55%) to Rs520.35, according to multiple reports. Kerosene also increased by Rs34.08 per litre to Rs457.80.
• Petroleum Levy Adjustments: The government increased the petroleum levy on petrol from Rs105 to Rs160 per litre, while reducing it to zero on diesel from Rs55, as reported by Dawn and The Hindu. This was intended to limit the impact on diesel prices and transportation costs.
• Subsidies and Relief: A subsidy of Rs100 per litre for motorcycle owners, capped at 20 litres per month for three months, was announced. Small farmers are to receive a one-time support of Rs1,500 per acre, according to Dawn. The prime minister also announced that federal cabinet members would forgo salaries for two months as an austerity measure, as reported by The Hindu.
• Prime Minister's Reversal: In a midnight address on Friday, April 3, Prime Minister Shehbaz Sharif announced an immediate reduction of Rs80 per litre in the petrol levy, bringing the price to Rs378 per litre, and stated the price would remain unchanged for at least one month, according to The Hindu.
• IMF Stance: The International Monetary Fund has asked Pakistan to eliminate distortions in petroleum pricing at the earliest, even though it had tacitly accepted a Rs152 billion subsidy cap, according to a Dawn report citing senior officials. The IMF continues to oppose across-the-board subsidies on major petroleum products.

Perspectives

Government Perspective: The government framed the price hike as a necessary response to global oil price shocks, emphasizing fiscal discipline and the need to preserve economic stability achieved under the IMF programme. Officials noted that the government had resisted the increase for weeks, absorbing the surge in the budget, but had run out of space. The targeted subsidies were presented as a way to cushion the impact on the most vulnerable.

Opposition Perspective: Opposition lawmakers in the National Assembly protested the increase, calling the government "incompetent" and "corrupt," and accusing it of dropping a "petrol bomb" on the people. The protest disrupted parliamentary proceedings, preventing any business from being transacted.

Public and Economic Impact: Analysts and commentators, as reflected in Dawn's editorial, warn that the price increase will lead to a fresh wave of inflation, with transporters and businesses already passing on higher costs to consumers. The burden is expected to fall disproportionately on low- and middle-income households.

International Perspective: The IMF's stance, as reported by Dawn, underscores the tension between fiscal discipline and social protection. The Fund has called for eliminating distortions in petroleum pricing, while the government has sought to balance this with targeted subsidies.

This article is based on reporting from Dawn and The Hindu. Some details, such as the opposition protest and IMF's specific demands, are drawn from single sources and have not been independently verified.