Oil and petroleum consumption in the country has been declining and the latest data from OCAC showing decline of 40 percent year-on-year in May-23. This decline followed the fall in petroleum product sales volume drop of 46 percent year-on-year in April 2023. The reasons for falling petroleum consumption in the country, and hence declining oil sales by the oil marketing companies, are linked to the ingoing political and economic crises in the country. These include the slowdown in the economy; the surge in petroleum prices; the resurgence of smuggled petroleum products from Iran; and a fall in furnace oil based power generation in the power mix.

The decline in petroleum sales in April 2023 for the OMCs was led by 80 percent year-on-year decline in furnace oil sales followed by 36 percent year-on-year fall in high speed diesel, and 24 percent cut in petrol sales.

However, some respite for volumes came in month-on-month analysis; sales of petroleum products were up by 11 percent month-on-month primarily due to the harvesting during the months and resulting rise in HSD sales; and the growth in refined products volumes due to cut in prices. Diesel sales were up by 19 percent, and petrol sales were up by 4 percent month-on-month. Furnace oil was also up this time on a month-on-month basis by 26 percent. Nonetheless, diesel sales continue to be weaker year-on-year by half in April, which is a clear indication of where the transportation and industrial activity stands in the country

The OCAC data shows that overall decline in sales of petroleum products by the oil marketing companies in 11MFY23was 26percent year-on-year led by 46 percent in FO, 29 percent in diesel, and 18 percent in petrol, which goes on to show that the sales will likely continue to be weaker in FY23with only one months remaining. However, June figures might show revival as the prices have seen a significant cut during the month.