Prime Minister Shehbaz Sharif on Saturday directed the finance and petroleum ministers to visit the provinces and prepare a strategy in coordination with the provincial governments for the conservation of petroleum products and their uninterrupted supply to the people.

The directives come a day after the government announced a Rs55 per litre increase in petrol and high-speed diesel prices, mere hours after PM Shehbaz and Finance Minister Muhammad Aurangzeb assured the nation that petroleum reserves were sufficient and the situation remained under control.

The fresh instructions by the premier came during a meeting chaired by him to review the country’s economic situation, according to a statement by the Prime Minister’s Office (PMO).

During the meeting, a briefing was given on the current global situation and the economic impacts on the region.

According to the PMO, the premier directed that a strategy emphasising austerity and savings be formulated in view of the current global economic pressure caused by the tensions in the region. He directed that actionable proposals on this matter be given within the next 48 hours.

He emphasised that the strategy should not only minimise the burden on the public but also prioritise public relief.

Meanwhile, PM Shehbaz was also given a briefing by a committee he formed to review the global economic impact of the recent tensions in the region.

The statement said that the premier was informed that the increase in the price of petroleum products was done on the suggestions of the committee, adding that the minimum possible burden of the global hike in prices was transferred to the consumers.

It further said that the prime minister directed the committee members to work actively and present practical suggestions for easing the burden on the people as soon as possible.

He also directed that any petrol pump or company found involved in creating artificial shortages or hoarding should be closed immediately, its license should be revoked and legal action should be taken against it.

Taking to the social media platform X, Information Minister Attaullah Tarar urged the public not to “pay attention to speculations and rumours”.

Tarar recalled that Deputy PM Ishaq Dar, Aurangzeb and Petroleum Minister Ali Pervaiz Malik had held a press conference on Friday night regarding the hike in petrol prices due to the global situation.

“The government of Pakistan and the concerned ministries will continue to release accurate and verified information from time to time,” he said, adding that other countries were also facing a similar situation.

The information minister said that the premier had given 48 hours for the formulation of a strategy for austerity in government affairs.

He also said that the premier had tasked the finance and petroleum ministers to meet the chief ministers of the four provinces and discuss measures against hoarding and their implementation so that the people were not exploited.

“The prime minister has directed that there will be no leniency for those involved in exploiting the public, and the licenses of those violating the orders will be cancelled,” he said.

Official explains process of determining fuel prices

Separately, Adviser to Finance Minister Khurram Schehzad, in a post on X, outlined how fuel prices are determined “so the process can be better understood”.

“Fuel prices are determined using the average Platts benchmark prices of petrol and diesel during the pricing period, along with exchange rate adjustments. The price is not based on the cost of a particular shipment purchased weeks earlier,” he said.

He said that at the same time, oil companies were legally required by the Oil and Gas Regulatory Authority (Ogra) to “maintain around 20 days of mandatory stock (and recently even higher due to regional tensions)”.

“This means companies are continuously selling fuel while simultaneously buying new cargo at prevailing international prices to replenish the same inventory,” he said.

“So, when a litre of fuel is sold today, it must be replaced with a litre purchased at current international prices to keep the reserve at required levels.”

“What people describe as an ‘inventory gain’ disappears because the stock is being replenished with more expensive molecules. In fact, the opposite situation happens quite often. When international prices fall, companies are forced to sell inventory purchased at higher prices at lower regulated prices, resulting in significant inventory losses,” he said.

He further said: “Sometimes the adjustment may look like a temporary gain, but very often it results in losses when international prices decline. It is not a windfall profit from ‘cheap oil bought earlier’.”