The oil marketing sector has had weaker volumes for FY23, and that continues as we enter FY24. After falling by continuously over the last few months, the oil sales by the OMCs declined by 6 percent year-on-year in July 2023 – the first months of FY24. In FY23, oil sales were down by 27 percent year-on-year recording the lowest sales in 17 years – excluding the COVID year FY20.

The year-on-year decline in petroleum consumption in July 2023 was due to weaker volumes of Furnace Oil thatfell by almost 60 percent year-on-year. On the other hand, the retail products like Motor Spirit and High Speed Diesel witnessed a year-on-year growth in July 2023, which was due to low base of July 2022.

On a month-on-month basis, the sales of the oil marketing companies in July 2023 were stable due to growthwitnessed in motor Spirit sales as well as Furnace oil volumes during the month. The growth petrol sales was due to slightly lower prices in July as compared to the previous month – June 2023. And also, there was some growth in volumes for MS due to summer vacations and demand uptick. Growth in Furnace Oil volumes on a month-on-month basis was due to increased consumption in the power sector versus previous month, which is a seasonal occurance as power generation increasingly uses FO during summer months. On the other hand, the diesel volumes slipped in July 2023 as agricultural activity slowed own after the Rabi season in June along with continued weak economic activity.

At the current pace, the oil consumption is likely to remain weak amid the expectations of price increase for retail fuels. Demand is likely to remain sluggish amid high inflation.