Islamabad: The Government of Pakistan announced an unprecedented surge in petroleum prices on Thursday, April 2, 2026, marking a staggering 43% increase for petrol and a 55% jump for high-speed diesel (HSD). Driven by the spiking global oil markets resulting from the ongoing U.S.-Israel conflict with Iran, the new rates have pushed the cost of petrol to Rs 458.41 per litre (up from Rs 321.17) and HSD to Rs 520.35 per litre (up from Rs 335.86). The price of kerosene also saw a significant climb, reaching Rs 457.80 per litre.
Petroleum Minister Ali Pervaiz Malik described the move as a “difficult decision” necessitated by the need to maintain fiscal discipline and preserve national economic stability. To mitigate the impact on the most vulnerable sectors, the government has restructured the petroleum levy, increasing it to Rs 160 per litre on petrol while slashing it to zero for diesel. Advisor on Economic Affairs, Khurram Shehzad, noted that the price hike is also an attempt to curb consumption, which rose by 13% for diesel last month despite the regional instability.
Targeted Subsidy Measures:
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Motorbike Owners: A subsidy of Rs 100 per litre will be provided for up to 20 litres per month to support low-income commuters.
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Agriculture Sector: Small farmers are set to receive a one-time direct support payment of Rs 1,500 per acre to assist with the ongoing harvest season.
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Logistics and Transport: Inter-city and goods transport vehicles will receive a Rs 100 per litre subsidy, while truck operators will be granted direct monthly support of Rs 70,000.
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Fiscal Reallocation: To fund these targeted reliefs, the government has cut the national development budget by Rs 100 billion and introduced several strict austerity measures across federal departments.
The move comes after the government admitted that it could no longer sustain the Rs 129 billion monthly subsidy bill that had been in place since the war began in late February. While the opposition has warned of hyperinflation following this “fuel shock,” the administration insists that the “Point-of-Sale” subsidy model will ensure that only deserving segments receive financial protection. With the Strait of Hormuz remained closed, officials warned that further adjustments may be necessary if global crude prices continue their upward trajectory.
