Pakistan Hikes Petrol Price by Record 43% as Global Oil Crisis Bites
Government ends blanket subsidies, introduces targeted relief for motorcyclists, farmers and transporters after oil prices surge amid Iran war
ISLAMABAD — April 3, 2026 — Pakistan has raised petrol prices by a record 43 percent and diesel by 55 percent, Finance Minister Muhammad Aurangzeb announced on Thursday, April 2, as the government ended blanket fuel subsidies and pivoted to targeted relief in response to soaring global oil prices triggered by the escalating Middle East conflict.
The price of petrol was increased by 137.23 rupees per liter to 458.41 rupees, while high-speed diesel rose by 184.49 rupees per liter to 520.35 rupees, with immediate effect, according to a notification from the Ministry of Finance . Kerosene prices were also raised by 34.08 rupees per liter to 457.80 rupees .
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The increases represent the largest single price hike in Pakistan’s history, with cumulative monthly increases reaching 63 percent for petrol and 75 percent for diesel since the Iran war began on February 28 .
Global Pressures Force Government’s Hand
Petroleum Minister Ali Pervaiz Malik, speaking at a news conference alongside Finance Minister Muhammad Aurangzeb in Islamabad, attributed the surge to “record-high” oil prices in international markets driven by the ongoing conflict between Iran and the US-Israel alliance .
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“Oil prices have skyrocketed in the international market due to the ongoing war in the Middle East,” Malik said, noting that the conflict has “engulfed not only the entire region, but the entire world as well” . He revealed that diesel in international markets has exceeded $250 per barrel, a historic high .
Pakistan imports 80 to 90 percent of its fuel needs, leaving the country acutely exposed to international price swings . The government had absorbed approximately 129 billion rupees in fuel subsidies over the past three weeks through austerity measures and cuts to development spending, but officials warned the approach was unsustainable as the conflict shows no signs of abating .
Targeted Relief Replaces Blanket Subsidies
To cushion the impact on the most vulnerable segments of society, the government announced a shift from blanket subsidies to a “Targeted Subsidy Program” . Finance Minister Aurangzeb outlined a package of relief measures:
- Motorcyclists and rickshaw users: 100 rupees per liter subsidy on up to 20 liters of petrol per month for three months
- Small farmers: One-time subsidy of 1,500 rupees per acre during the harvest season
- Inter-city public transport and freight: 100 rupees per liter subsidy on diesel
- Freight trucks: 70,000 rupees monthly fuel support
- Large transport vehicles: 80,000 rupees per month
- Public service buses: 100,000 rupees per month
The government will also provide assistance to Pakistan Railways to help maintain affordable fares, particularly for lower-income passengers .
Petroleum Levy Adjustments
To manage the price shock while maintaining fiscal discipline under the International Monetary Fund (IMF) program, the government adjusted petroleum levy rates. The levy on petrol was increased from 105 rupees to approximately 160 rupees per liter, while the levy on diesel was reduced to zero from 55 rupees .
The IMF has reportedly resisted allowing greater flexibility in Pakistan’s petroleum levy structure, viewing it as a key revenue source tied to program commitments . Prime Minister Shehbaz Sharif has directed the Finance Ministry to re-engage with the Fund to seek options to reduce the burden on consumers .
Energy Conservation Measures
Alongside the price hike, the government announced plans to implement energy conservation measures, including revised market operating hours to reduce electricity consumption. A formal plan is expected after provincial consultations next week . Officials estimate the measures could save approximately 1,200 megawatts during peak hours .
The government has also launched a nationwide crackdown against hoarding of petroleum products. The Federal Investigation Agency, along with the Oil and Gas Regulatory Authority and local administrations, has conducted 16 targeted raids resulting in the recovery of approximately 25,000 liters of petroleum products and the sealing of 16 illegal storage and distribution centers .
Economic Pressures Mount
Prime Minister Shehbaz Sharif, addressing a high-level meeting attended by federal and provincial leadership, said Pakistan’s economy—which had stabilized over the past two years—was now facing renewed pressure due to global uncertainty and supply disruptions .
The prime minister outlined a series of austerity measures adopted by the government, including voluntary surrender of two months’ salaries by federal cabinet members, a 50 percent reduction in government fuel consumption, and restrictions on the use of official vehicles . The government also generated 100 billion rupees in savings through cuts to the Public Sector Development Programme .
Supply Disruptions Loom
The price hike has already triggered backlash from the transport sector. The Oil Tanker Contractors Association has warned of a potential strike, stating that tanker loading would be halted and demanding an increase in freight charges . Association President Abdullah Afridi said current freight rates were no longer viable under the new diesel prices and warned of financial losses if operations continue unchanged .
Diplomatic Efforts
Meanwhile, Prime Minister Sharif revealed that Pakistan has been actively mediating to help secure a ceasefire in the region. Deputy Prime Minister and Foreign Minister Ishaq Dar has spoken with his Iranian counterpart and other foreign ministers, while Chief of Army Staff Field Marshal Asim Munir has been playing a key role in diplomatic efforts .
“Pakistan has made every possible effort to secure a ceasefire, and these efforts are still ongoing. With the grace and blessings of Allah Almighty, success will be achieved in this matter,” the prime minister said .
Looking Ahead
The finance minister said the government will review the subsidy measures on a monthly basis, with adjustments depending on global market conditions and the trajectory of the conflict .
As of Friday, April 3, the new fuel prices remain in effect, with the government urging political consensus and national unity to navigate the economic challenges posed by the widening regional conflict .
SOURCES / INPUTS
Radio Pakistan: Federal Government announces to increase prices of petroleum products
Pakistan Today: Oil tanker contractors warn of strike after fuel price increase
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