Oil consumption in the country has shrunk to its minimum since FY07 to only 16.6 million tons during the year excluding the COVID year FY20 where the total oil industry’s volumes sold stood at around 16.3 million tons. One of the weakest years for petroleum sales in the country’s history would not be a wrong since total volumetric sales have not been lower than 18 million tons from the time where the data is available. The two weakest years for oil sales have been FY20 and FY23 where the former was bruised by the pandemic demand destruction, while the latter was the result of a poor economic situation in the country.

Overall, FY23 oil sales were seen falling by 26 percent year-on-year with highest decline of 49 percent in furnace oil volumes, followed by 28 percent year-on-ear in high speed diesel, and 17 percent year-on-year in motor gasoline sales.

The monthly petroleum sales in Juen-23 as per OCAC’s recent data, were down by 31 percent year-on-year, which was due to inflate petroleum product prices, economic turmoil in the country, lower reliance on furnace oil for power generation, and increased smuggling of retail products through Iranian border.

During the month, the decline in petroleum sales was led by 78 percent year-on-year decline in furnace oil, 24 percent decline in diesel consumption, and 9 percent year-on-year slump in petrol volumes. However, there was an uptick of 4 percent on a month-on-month basis, which was on account of higher motor gasoline sales during summers and higher furnace oil consumption for power generation during the hot weather. On the other hand, diesel volumes remained flat, amid higher prices.

At the current pace, it looks like the oil consumption will take a slow track to recovery in FY24 with high inflation and pressure on consumption remaining the key stumbling block followed by the ongoing import restriction on the auto sector.