Every time there's a fire in the Middle East, the first thing that hits you is your kitchen and my bike tank. Crude oil prices have jumped to $126 a barrel in global markets as tensions with Iran escalate. The war situation has boosted American shale oil producers, whose profits have reached record levels. But this simply means that a major hike in petrol prices within Pakistan is just a few days away.

Impact of petrol price hike on your wallet

We have to understand that Pakistan imports a major part of its energy requirement. When oil is expensive globally, the government and OGRA have no choice but to increase prices. Now that US shale companies are prioritizing dividends and buybacks to their shareholders rather than drilling new wells, global oil supply will remain tight. This means that these $126 prices are not temporary but will weigh on your pocket in the coming weeks. Be it driving on Lahore's Ring Road or the daily commute on Karachi's Hub River Road, motorcycle petrol is now becoming a torment for the low-income class.

Next wave of inflation and electricity bills

Not only petrol, but because of this crisis there is a risk of a new storm of inflation across the country. When imported fuel is expensive, electricity for power plants also becomes expensive. As a result of the decisions of Nepra and the Power Division, the per unit rates of electricity may increase further. From vegetables to flour and pulses, the cost of transporting everything goes up.

  • Transporters increase fares quickly
  • Local factories reduce production as imported raw materials become expensive
  • General vendors raise prices of food items to maintain profits

What should you do now?

In this situation you need to take immediate care in your financial affairs. Minimize non-essential travel and start using carpooling or public transport if possible. Set aside at least fifteen to twenty percent of your monthly household budget for fuel and electricity bills. Before making any big financial decisions or buying a new car, take a few weeks to get the hang of it.

What to look forward to?

The announcement of new prices of petroleum products by OGRA in the coming days will be the most important signal. It also has to be seen whether the government puts the entire burden of the increase in the global market on the consumers or gives a relief package. The direction of the Iran conflict at the international level and the decisions of OPEC Plus are two important factors that you should keep a close eye on.