Government hikes petroleum levy, pushing petrol charge above Rs160 per litre

The government has significantly increased the petroleum levy across multiple fuel categories, raising the burden on consumers as part of efforts to meet fiscal targets for the ongoing financial year.

According to official figures, the levy on petrol has been raised by Rs55 per litre, taking the total to Rs160.61 per litre. Previously, the levy stood at Rs106 per litre, marking a sharp increase in taxation on the country’s most widely used fuel.

The revised rates also show a steep hike in high-octane fuel, where the levy has been set at Rs305.37 per litre. Other fuel categories have seen smaller but notable increases, with kerosene oil now carrying a levy of Rs20.36 per litre, while light diesel has been raised to Rs15.84 per litre.

In addition, the levy on furnace oil has been fixed at Rs77 per metric ton, further expanding the scope of the government’s revenue measures within the energy sector.

Officials say the move is aligned with the government’s fiscal strategy, as it seeks to achieve a petroleum levy collection target of Rs1,468 billion for the current financial year.

The increase is expected to have a cascading impact on transportation and commodity prices, potentially adding to inflationary pressures already being felt by consumers.

Petrol and diesel prices skyrocket amid Middle East tensions

The federal government on Thursday announced a sharp increase in petroleum prices, with petrol rising by Rs137.41 per litre and diesel by Rs184.14. The new rates bring petrol to Rs458 per litre ($1.64) and diesel to Rs520 per litre ($1.86), marking one of the steepest month-on-month hikes in recent years.

Officials attributed the surge to escalating tensions in the Middle East, particularly the ongoing US-Iran conflict near the Strait of Hormuz, which has pushed global crude oil prices higher. Brent crude is trading around $109 per barrel, while US West Texas Intermediate crude surged to $112.60, the highest since early March.

Petroleum Minister Ali Pervaiz Malik and Finance Minister Muhammad Aurangzeb confirmed the hike at a joint press briefing. To ease the burden on smaller commuters, Aurangzeb announced a subsidy for motorcycles, allowing up to 20 litres of petrol at Rs100 less per litre.

The dramatic increase is expected to trigger higher fares for public transport, ride-hailing services, and logistics, adding pressure on everyday consumers already dealing with rising living costs. This revision comes just weeks after the government absorbed Rs56 billion in fuel costs, reflecting the ongoing volatility of global energy markets.