KARACHI, Dec 30: The Oil Companies Advisory Committee (OCAC) is expected to increase the prices of petroleum products by three to seven per cent when it meets on Tuesday to announce the new prices for January 1-15.

Analysts said that the domestic oil prices will be raised as a result of rising trend in global oil prices which have reached almost two year high to over $32 a barrel.

An analyst at Arif Habib Securities said that in the global market, the crude prices forced to post a fresh two year high on the back of prolong strike in Venezuala and mounting fears of war in the Gulf. On Friday in New York, crude oil futures rose 58 cents to peak $32.25 a barrel last week, the highest level since January 2001. On Monday, oil prices peaked to $32.50 a barrel.

An analyst at Taurus Securities said that oil marketing companies (OMCs) have been posting improved bottom lines in recent times on back of appreciating oil price and increased margins (first quarter 2003).

From the mid of this quarter (October to December 2002), oil prices declined significantly creating concern in the market that this quarter they will book inventory losses. However, lately oil prices are on the rebound.

An analyst at Invest Cap said that when local petroleum prices were revised on December 16, crude oil was around $27-28 a barrel. “The local petroleum prices may revise by eight to 12 per cent,” he added. This, of course, is barring any adjustment in government levies in order to ease the burden on petroleum consumers.

An analyst at Khadim Ali Shah Bukhari said that domestic oil prices are likely to go up by four to six per cent.

The government has been resisting passing on the price hike to end users in the recent past, but the current surge in global oil prices is likely to force the government to reconsider its decision to subsidize POL consumers, he added.

In case POL prices go up by four to six per cent, it will result in windfall gains for the oil marketing companies (OMCs). PSO will be the major beneficiary, the analyst said.