Karachi July 3 2024: Sales of petroleum products decreased by 8 percent to 15.3 million tons during the fiscal year 2024, compared to the previous year, reaching the lowest level in the last 18 years, according to data shared by OCAC.
“Petroluem sales decline given (1) slowdown in domestic demand and economic activity amid record inflation and high interest rates, (2) elevated prices of MS and HSD, (3) lower power generation on FO, and (4) increased smuggling of Iranian products” writes Zeeshan Azhar Analyst at Foundation Securities in its report.
During the month, in top three Shell Pakistan (Shell) experienced the highest slide, showing a 12 percent decrease, followed by a 9 percent slide in sales of Pakistan State Oil (PSO) and a 5 percent drop in the volumes of Attock Petroleum Limited (APL).
Sales of Motor Spirit (MS) for fisca year 2024 decreased by 4 percent compared to the last year, reaching 7.1 million tons, driven by elevated product prices. A similar trend was observed in the sales of High-Speed Diesel (HSD), which decline by 2 percent to 6.2 million tons in fiscal year 2024, primarily due to lower demand from the agriculture sector and highr prices.
Notably, sales of Furnace oil (FO) experienced a significant decline of 49 percent in fiscal year 2024 compared to last year sales, dropping to 1.0 million tons. This decline was attributed to reduced demand from power producers.
“We opine that the sharp decline in demand for petroleum products seen during last 2 years would reverse in FY25 amid expected pick up in economic activity despite
elevated domestic retail product prices which we believe are here to stay given higher PKR-US$ parity and sticky int’l oil prices due to geopolitics” states Zeeshan.
