Global Oil Prices Approach $120 Again — What It Means for Pakistan's Daily Fuel Pricing

Global crude prices are once again testing the $120-per-barrel threshold, with Brent trading near $118 as traders brace for a volatile November driven by fears of renewed US-Iran hostilities. The rally comes just days ahead of the US midterm elections, and despite mediation attempts by Qatar and Pakistan, most market signals point toward a resumption of tensions in the coming weeks.

The immediate trigger was an announcement by Iran's Islamic Revolutionary Guard Corps that three unidentified vessels struck naval mines in the Strait of Hormuz, caught fire and were abandoned after taking what Tehran described as an unauthorised route. The US Central Command has disputed the IRGC's account, as it has in previous incidents. The strait remains the world's most critical oil chokepoint, and any disruption there ripples through global energy markets within days.

Suppliers and governments are already adjusting. EU member states plan to release 42 million barrels of strategic oil and fuel reserves over the next three months, half of it diesel, with France alone releasing 10 million barrels and expecting pump prices to fall by €0.12 to €0.18 per litre within days. Gulf producers are also working around the strait: Saudi Aramco has reportedly begun offering discounted spot cargoes to European buyers for October and November arrivals to maximise loadings from its Red Sea coast, while Abu Dhabi's ADNOC has told clients that its second 1.5 million-barrel-per-day pipeline to Fujairah, which bypasses Hormuz, will see first deliveries in early 2027.

For Pakistan, the timing matters because the country now revises fuel prices daily, meaning movements in global markets reach the pump far faster than under the previous fortnightly system. A volatile week in international markets could therefore translate into frequent changes in what consumers pay for petrol and diesel.

Petrol currently costs Rs. 377.91 per litre, so a motorist using 40 litres a month spends roughly Rs. 15,116 on fuel. Every Rs. 1 per litre increase adds Rs. 40 to that monthly bill, while a Rs. 10 increase would add Rs. 400. The government has already intervened once to hold prices steady, cutting the petroleum levy on petrol from Rs. 80 to Rs. 65.29 per litre and asking local refineries to absorb a Rs. 14.71 per litre rise in import costs.

Whether Islamabad can continue cushioning consumers if Brent crosses $120 remains an open question, with fiscal room limited and import costs already elevated. For now, traders and policymakers alike are watching the Strait of Hormuz — and the calendar — closely.