New Delhi, April 1 (NationPress) The recent surge in fuel prices in Pakistan can be attributed not only to regional turmoil and the temporary closure of the Strait of Hormuz but also to significant issues of structural mismanagement, delayed reforms, and political motivations, as highlighted in a recent report.

The report by the Pakistan Observer notes that officials characterized the situation in the Middle East as an extraordinary global crisis, asserting that precautionary measures had been implemented to manage volatility and protect national fuel reserves.

In response to these factors, the government announced a hike of Rs 55 per litre for both petrol and diesel, increasing petrol prices from Rs 266.17 to Rs 321.17 and diesel to Rs 335.86, marking an approximate rise of 17 percent.

Furthermore, the IMF had been urging Pakistan to adjust fuel prices even before the tensions in Iran heightened.

The IMF stressed the importance of avoiding subsidies and achieving the annual petroleum levy target of Rs 1.468 trillion. By December 2025, over Rs 822 billion had already been collected, highlighting the necessity of maintaining elevated per-litre levies.

Another critical point overlooked by the government, as noted by Assadullah Channa in the report, is the timing of fuel procurement. A significant portion of Pakistan's current fuel inventory was imported approximately 24 days prior to the March 6 price adjustment at pre-war rates. As a result, the Rs 55 increase affected all available stock, including fuel purchased at earlier, more affordable prices.

The report also points out that the structure of the price adjustment indicates a political element. As reported by the Express Tribune, the rise in petrol prices surpassed the actual increase in international rates because the government aimed to subsidize diesel, primarily used by the agriculture, freight transport, and public transport sectors.

This fuel price increase has escalated production and transportation expenses, driving up wholesale prices for essential goods such as flour, vegetables, and meat.

Transport fares have risen, and retailers have faced challenges in selling staples at government-mandated prices. The industry has warned of increased pressure on manufacturing and agriculture, as Pakistan is grappling with its highest poverty rates in 11 years and unemployment levels not seen in 21 years.

The report argues that framing the price hike as a result of external shocks distracts from fundamental issues like chronic revenue shortfalls, dependency on petroleum levies to bridge fiscal deficits, and the underutilization of contingency reserves intended for such crises.