Pakistan to Face Higher Oil Price in 2025

By ZB Hussain

Islamabad: Pakistan is likely to feel the heat of cut in production of oil by OPEC + countries that may lead to higher oil prices in coming months.

Pakistan has faced a reduction in oil prices, but the government has not passed on the relief to the consumers.

Rather it had increased the rate of petroleum levy that jumped up to Rs 86 per liter but did not pass on relief.It redirected revenue to electricity consumers to cut prices up to Rs 1.71 per unit.

Recently, it had also denied the consumers of relief and redirected the revenue collection to fund can and road project in Balochistan costing Rs 370 billion.

Even, the government had promised to allow increase in additional Rs 4 per liter freight to oil industry to compensate losses it has been facing due to sales tax exemption.

But this proposal also went into dustbin and the oil industry was making hue and cry over this unfulfilled promise.

Now, the consumers in Pakistan may face higher oil prices in the coming days as OPEC, a cartel of oil-producing countries, has announced a cut in production to compensate for the overproduction in the last months.

OPEC+ countries have announced to cut oil production in the coming months under its compensation plan to compensate earlier overproduction of a total of 4.57 million barrels per day.

Some OPEC+ members had produced more oil what they were allowed and now they wanted to cut production, mainly between May and October 2025. They want to compensate over production by June 2026.

The reduction in planned oil production is going to shake up the global oil market. Perhaps this was the reason that China had imported oil to a record level in March 2025, the imports that were higher than since August 2023.Oil Industry Warns of Oil Shortage in Lahore

It looked like China had felt the heat of reduction in global oil production and therefore, it imported cheaper oil to fuel its economy.

What’s the Deal with OPEC+ and Overproduction?

OPEC+ (that’s OPEC plus allies like Russia, Kazakhstan, and Oman) had inked a deal to cut oil production aimed at stabilizing prices. This will help oil-exporting countries to make more revenue by selling their products in the global oil market.

According to reports, 8 OPEC+ countries which included key players like Saudi Arabia, Iraq, and Russia had overproduced by a whopping 4.57 million barrels per day (bpd).

So now, they wanted compensation for the overproduction between May and October 2025 till June 2026 to compensate revenue what they lost due to lower prices amid production of oil.

 Overproduction + Compensation = Global Market Confusion

Despite all the rules, countries like Iraq and Russia have been keeping busting their quotas. This policy has resulted in flooding the market with more oil than it needs which resulted in lower oil prices.

In March alone, OPEC+ had hit an 8-month production high at  319,000 bpd over the ceiling.

So, How Does This Affect Oil Prices in Pakistan?

When OPEC+ messes with supply, global oil prices fluctuate, and they will have a price impact on Pakistan, being a net oil-importing country.

The oil prices go up when global oil producers cut the production and prices may go down in case of production spikes in global market.

Under the compensation plan, when OPEC countries announced a compensation plan to cut production, the prices will go up in the international market between, especially between May–October 2025.

So, they will also impact countries like Pakistan and trickle down to electricity, transport, and the cost of living.

Pakistan has been facing a dollar crisis. Higher prices mean Pakistan will have to spend more dollars on oil imports, putting pressure on foreign exchange.

 Will Pakistan’s Fuel Prices Go Up in 2025?

The short answer is: Probably yes, Pakistani consumers may be facing higher oil prices if the government does not absorb the impact of the oil price increase by lowering the rate of petroleum levy.