• International oil prices have declined significantly during the last week amid demand concerns, stronger USD, inflationary pressure, and increasing supplies. The prices of WTI, Brent, and Arablight dropped by ~9%-11% as compared to the last fortnightly average prices.
• The international gasoline (MS) plummeted by 15% to USD 84.3/bbl compared with the last fortnightly average of USD 99.3/bbl.
• Similarly, the international prices of HSD took a dip of 10% to USD 110.6/bbl compared with the last fortnightly average of USD 122.3/bbl.
• Furthermore, PKR has appreciated 2.7% to 283.87/USD compared to the last fortnightly average of 291.65/USD.
• Incorporating the above-mentioned prices alongside PKR appreciation and assuming the international prices and currency remain at the same level for the next 10 days, the local petrol and diesel prices are expected to go down by PKR 41/L and PKR 19/L in the next fortnightly prices effective from 16-Oct-2023.
• To recall, the exchange rate adjustment in the last fortnightly prices of MS and HSD was PKR 11.9/L and PKR -2.8/L respectively.
• Even assuming the same currency adjustment for MS and nil on HSD in the upcoming fortnightly prices, the MS and HSD are expected to drop by PKR 28.6/L and PKR 19.3/L.
• On the inflation front, incorporating the above, our estimates for Oct’23 CPI are expected to go down by 92bps to 27.5%.
Courtesy – AHL Research