International crude oil prices dropped sharply on Tuesday, with Brent crude falling below $100 per barrel, but motorists in Pakistan may have to wait before the decline shows up at petrol stations.
The reason is the way Pakistan calculates domestic fuel prices. The Petroleum Division uses a seven-working-day rolling average of international oil prices, meaning a sudden fall in crude prices does not immediately translate into cheaper petrol.
Why Petrol Prices Do Not Fall Quickly
The Petroleum Division is currently using a seven-day rolling average based on international benchmarks, including the Platts Arab Gulf Mean Price, to calculate domestic fuel prices.
This averaging mechanism means several days of international price movements are taken into account before a change is reflected in Pakistan’s petrol rates.
At the time of reporting, Brent crude was trading around $99.70 per barrel, while West Texas Intermediate (WTI) stood near $91. Murban crude was trading at approximately $114 per barrel.
US-Iran Talks Put Pressure on Oil Prices
Global oil markets have remained under pressure as traders monitor possible progress in diplomatic talks between the United States and Iran.
Any breakthrough could ease concerns over further disruptions to oil supplies from the region, putting additional pressure on international crude prices.
However, the recent decline has not been a steady one. Market participants continue to expect further movement in crude prices as they watch developments following the United Nations General Assembly session and the outcome of US-Iran discussions.
Traders Wait for Clearer Signals
Some traders who had positioned themselves for lower oil prices are now closing those positions while they wait for clearer signals from diplomatic developments.
The Group of Seven (G7) foreign ministers have also urged Iran to stop arming Yemen, adding another diplomatic factor to the market outlook.
For Pakistani consumers, however, the immediate impact of the international decline remains limited. Even if crude prices continue falling, the seven-working-day averaging mechanism means any significant reduction in petrol prices would take time to filter through to the domestic market.
