Pakistan's Deregulated Oil Market Leaves Economy Vulnerable to Price Volatility

Pakistan's petroleum sector has been deregulated to create more efficient markets and attract investments, but this move has exposed consumers and businesses to fluctuations in international oil prices.

The country's economy is heavily dependent on oil imports, making it vulnerable to price volatility. According to the Pakistan Economic Survey 2024-25, petroleum products are one of the largest import groups in the country's import basket.

The government has implemented market-based pricing policies, including reducing fuel subsidies and increasing taxes, with support from the International Monetary Fund (IMF). The ex-refinery price is now determined by OGRA based on international prices of oil, exchange rates, freight charges, and taxation. However, consumers still feel the effects of international oil prices directly.