The federal government on Thursday increased the price of petrol and high-speed diesel (HSD) by 45 paisas and Rs1.16 per litre, respectively, for August 14.

According to a notification issued by the Ministry of Petroleum, the price of petrol was fixed at Rs325.43 per litre, while HSD would now cost Rs383.95 per litre.

The latest revision comes a day after the government decreased the price of petrol by 94 paisas while hiking the price of HSD by 54 paisas per litre for August 13.

Read: Govt decreases petrol price by 94 paisas, hikes HSD by 54 paisas for August 13

On July 17, the government introduced a daily fuel price review mechanism amid volatility in global oil prices following renewed hostilities in the Middle East.

The daily fuel prices are based on a seven-day average of international market rates to align with international standards.

According to the Pakistan Economic Survey 2024-25, petroleum products constitute one of the country's largest import categories, making the economy highly vulnerable to changes in global crude oil prices. Domestic refineries satisfy only part of national demand, while the remainder is met through imports of crude oil and refined petroleum products. Consequently, every increase in international oil prices raises Pakistan's import bill, pressures foreign exchange reserves, and contributes to inflation.

Pakistan previously exercised significant government control over petroleum pricing through subsidies and administrative interventions. While these measures temporarily protected consumers, they imposed substantial fiscal costs. During periods of elevated global oil prices, successive governments delayed passing price increases to consumers, creating financial pressures for oil marketing companies, refineries, and the national budget. Large fuel subsidies widened fiscal deficits, increased public borrowing, and weakened macroeconomic stability.

Global geopolitical developments continue to pose significant risks. International oil prices are influenced by decisions taken by OPEC+, conflicts in the Middle East, sanctions on oil-producing nations, and disruptions in critical shipping routes such as the Strait of Hormuz and the Red Sea. Any interruption in these supply chains can immediately increase crude oil prices and freight costs. Since Pakistan imports the majority of its petroleum requirements, these developments quickly translate into higher domestic fuel prices.

Oil prices pared losses to less than 1% after dropping more than 3% earlier on Thursday, as reports that Yemen's Houthis ‌had targeted a Saudi Aramco refinery with drones renewed concerns over supply disruptions in an already tight global market.

The Houthis attacked an Aramco refinery in Saudi Arabia's Jazan with two drones on Thursday, the Iran-aligned movement's Saba News Agency reported.

Brent futures were down 74 cents, or 0.8%, at $88.24 a barrel at 11:58 am EDT (1558 GMT), while ​US West Texas Intermediate (WTI) crude was down 77 cents, or 0.8%, at $82.56.