The oil marketing segment has been hit hard by weaker volumes amid escalating prices, shrinking margins, weaker currency and economic slowdown. The September 2023 sales of the petroleum products were the lowest on a year-on-year basis since COVID lockdown in March 2020High speed diesel volumes were the lowest since lockdown in March 2020, and same was the case for petrol (gasoline). The September volumes were primarily due to primarily due to record-high prices, smuggled oil from Iran, fall in auto sales, and lower FO-based power generation in the country. Recorded at around one million tons, the oil sales were down by 31 percent year-on-year in September-23. Product wise, petrol sales were down by 18 percent year-on-year during the month, while diesel sales fell by 24 percent year-on-year. Meanwhile, furnace oil sales plunged by 72 percent year-on-year.

On a month-on-month basis, petroleum sales reported a decline of 28 percent in September-23 which was due to rising petrol and diesel prices, and fall in FO usage in power generation in MS and HSD prices. Product wise, the sales of petrol and diesel tumbled by 23 percent and 28 percent month-on-month, while the furnace oil dropped by 28 percent during the month.

Overall, in 1QFY24, the petroleum sales were weak and lower by 16 percent versus 1QFY23 with a decline in all products witnessed during the period.

At the current pace, the oil consumption is likely to remain under pressure especially amid the global supply constraint and weak economic activity. At the same time, some recovery might be seen due to decline in petroleum prices recently.