The oil sales by the oil marketing sector during the first half of FY24 (1HFY24) witnessed a decline of around 15 percent year-on-year with sales of 7.7 million tonnes, as per the data by the OCAC. With December 2023 oil sales, the CY23 sales volumes can also be seen to follow a declining trend.

Monthly petroleum sales by the OMCs for December 2023 stood at a little over 1.2 million tonnes, which is lower by around 7 percent year-on-year, and 10 percent on a month-on-month basis. The year-on-year decline in the top three fuels: furnace oil, high-speed diesel, and motor gasoline was around 36 percent, 2 percent, and 8 percent respectively. And the decline came on the back of weak economic activity, rising petroleum product prices over the last year, and weak demand for furnace oil.

Market analysts believe that the decline in month-on-month sales by the oil marketing companies in December 2023 has been due to the end of the Rabi crop harvesting season. The agriculture sector is a big consumer of diesel, and the decline of 21 percent month-on-month decline in HSD volumes in December has a lot to do with lower consumption by the sector. The motor gasoline sales remained flat where the volumes were down by less than one percent month-on-month. On the other hand, furnace oil volumes were only slightly down by 3.7 percent month-on-month.

Going forward, while much depends on international oil prices, there are also some hopes of a revival in volumetric sales with some improvement in economic activity and the ongoing falling petroleum price environment.