With the beginning of a new fiscal year, oil sales by Oil Marketing Companies (OMCs) in Pakistan experienced a notable decline. Total petroleum sales for the month of July-24 were recorded at 1.20 million tons, a decrease of 11 percent year-on-year This reduction was attributed to several ongoing factors including increased prices of Motor Spirit (MS) and High-Speed Diesel (HSD), the availability of smuggled petroleum products from Iran, and reduced demand for Furnace Oil (FO)-based power generation.
Breakdown of July-24 sales show that petrol (MS) sales decreased by 10 percent year-on-year due to higher prices, which discouraged consumption. Diesel (HSD) sales fell by 6 percent year-on-year due to similar factors affecting MS sales. Sales of furnace oil (FO) also saw a significant plunge of 46 percent year-on-year YoY, with volumes at 0.08 million tons. This reduction was mainly due to a shift away from FO-based power generation. On a month-on-month basis, petroleum product dispatches contracted by 17 percent in July-24 with MS sales dropping by 16 percent, HSD sales by 18 percent, and FO sales by 27 percent month-on-month respectively.
Back in FY24, the overall OMC volumes were down by 8 percent year-on-year. Sales of MS and HSD experienced a decline of 3.8 and 1.7 percent year-on-year respectively, due to slower than expected economic recovery, elevated fuel prices, and an influx of smuggled fuel into the country.
While the outlook for the upcoming fiscal year suggests a potential mild recovery in petroleum sales, driven by the low base effect from FY24, the global geopolitical situation and fluctuating oil prices will continue to play a crucial role in shaping the market dynamics. Moreover, the biggest threat continues to be the smuggling of petroleum products that must be addressed completely.
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