Fuel prices are likely to be reduced in the country next month, as the government is yet earning a huge profit on sales of petroleum products.

Price of petrol, which is currently available at Rs 71.25 per litre, is expected to be reduced by Rs4 in March. Similarly, the price of high speed diesel – Rs 75.79 – is likely to be slashed by Rs5, they added.

Earlier this month, Prime Minister Nawaz Sharif had announced a reduction in PoL prices by Rs5 per liter on all categories of petroleum products including petrol and diesel.

Opposition parties have been criticising the government for its failure to provide relief to citizens following the continuous decline in oil prices in the international market.

According to experts, benchmark Arab Light Crude has dropped by 52.77 per cent to $26 per barrel from $55 in January 2015, but the government reduced petrol and diesel prices by a meagre 3 percent in the last one year.

In January 2015, petrol and diesel prices stood at Rs78.3 and Rs86.23 per litre which was reduced by just Rs5. The government instead of passing on the benefit of record low world oil prices to consumers raised petroleum development levy (PDL) and general sales tax. Currently, consumers were paying around Rs24 and Rs27 per litre sales tax on petrol and diesel.

Experts said oil prices had been on the decline due to global oversupply and sluggish demand, but domestic oil prices did not show any big drop as the government raised taxes to meet its budgetary targets.

The government regulates prices of petrol and diesel while furnace oil price is determined through a market mechanism. One of the reasons for higher petrol price in the region is because of higher devaluation of regional currencies against the US dollar, they observed.

Lukman Otunuga, the research analyst at FXTM, stated that WTI tumbled back towards $30 during trading during last week following the record high build up in U.S crude stocks which intensified the heightened anxieties over the unrelenting oversupply in the markets. This release came after Saudi Arabia explicitly stated that it was not prepared to cut oil productions despite the pending deal to freezing output levels at January’s record highs. In the way that current developments are turning out, it seems quite unlikely that a production cut or freeze may materialize as the conflict of interest between OPEC and non-OPEC members continues to act as an obstacle. Eventually, these speculative boosts in oil prices from the empty promises of production cuts may subside with WTI oil sinking lower back towards $25. From a technical standpoint, this commodity is bearish and a breakdown below $30 may encourage a further decline towards $25, Lukman Otunuga added.

Meanwhile, the All Pakistan Business Forum (APBF) urged the government to transfer the reduction of crude oil prices in the international market to the Pakistani industry and general consumers. “The slight cut in the petroleum prices is not a reflection of the huge drop of more than 50% in the international market,” said APBF President Ibrahim Qureshi.

The Oil and Gas Regulatory Authority (OGRA) had proposed around Rs 7 slash in the petroleum prices in at the conclusion of Jan, however, the APBF leader has urged the government to announce a reduction of Rs 15-20 per litre to make it in line with the international prices. He also warned the government of refraining from enhancing general sales tax (GST) on the petroleum products.