Amid a tight supply and the fears of a Russian invasion of Ukraine, the oil prices crossed $90 a barrel for the first time in the last seven years on Wednesday.
As the brent crude has hit $90.02 briefly, it is the first time the global benchmark has crossed $90 since October 2014. The U.S. West Texas Intermediate (WTI) crude also rose to $87.28.
British Prime Minister Boris Johnson and U.S. President Joe Biden both warned Russia, in recent days, that there would be consequences for the world if Russia made a move on Ukraine. Other Western leaders have also issued warnings that Russia would have to pay a price for an invasion.
The tensions have come at a time when the U.S. is already over a million barrels short of its record level of daily output. The Organization of the Petroleum Exporting Countries and allies (OPEC+) is also struggling to meet its monthly production targets.
The influential group of some of the world’s top oil producers is set to meet on February 2, 2022, to consider another output increase.
The rising oil prices are likely to translate into a further increase in domestic fuel prices. The government had raised the price of petrol by Rs. 3 per liter on January 16.
The Government of Pakistan has been increasing petroleum levy on fuel prices as part of its negotiations with the International Monetary Fund (IMF). The petroleum levy would be increased by Rs. 4 on the first of every month until it reaches a maximum of Rs. 30 per liter.
Due to the increase in international oil prices in recent weeks, it is likely that the price of petrol in Pakistan will cross Rs. 150 per liter very soon.