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Petroleum Sales Plummet to 44-Month Low in Pakistan
In September 2023, Pakistan witnessed a significant drop in the demand for petroleum products, reaching its lowest point in 44 months. The key drivers behind this decline include record-high fuel prices, the availability of smuggled oil from Iran, reduced furnace oil-based power generation, economic slowdown, and a decrease in automobile sales.
Sales Figures
According to analysts, petroleum product sales in Pakistan stood at 1.06 million tons in September 2023, a decrease of 31% compared to the previous year and a 25% month-on-month decline. This drop in demand is particularly striking, with petrol sales down 23% month-on-month and diesel sales down 28% month-on-month.
Factors Behind the Decline
Several factors have contributed to the decline in petroleum sales:
Record-High Fuel Prices: The surge in global oil prices has translated into higher fuel prices in Pakistan. Petrol prices rose by 14%, reaching Rs331 per litre in September, while high-speed diesel (HSD) prices increased by 12% to Rs330 per litre.
Smuggled Oil from Iran: The availability of smuggled oil from Iran at lower prices has adversely affected legal petroleum sales in Pakistan.
Lower Furnace Oil-Based Power Generation: Reduced demand for furnace oil-based power generation has led to a decrease in furnace oil sales, which fell by 72% year-on-year and 28% month-on-month.
Economic Slowdown: Pakistan’s economic slowdown, coupled with a decline in automobile sales, has contributed to the overall reduction in petroleum product demand.
Outlook
Analysts are cautiously optimistic about a potential rebound in petroleum sales in the coming months. They believe that recent declines in petrol and diesel prices, coupled with tightened border security to combat smuggling, may lead to improved sales figures in the near future.
First Quarter of FY24
During the first quarter of the fiscal year 2023-24, sales of petroleum products experienced a 16% year-on-year decline, totaling 3.77 million tons compared to 4.49 million tons in the same period the previous year. Product-wise data reveals reductions in all categories, with motor spirit, HSD, and furnace oil showing decreased offtake.
Impact on Listed Entities
Among listed entities, Pakistan State Oil (PSO) recorded a 37% year-on-year and 30% month-on-month decline in sales in September, primarily due to reduced sales across all sections, with furnace oil experiencing a significant drop of 94% year-on-year and 61% month-on-month. Shell Pakistan and Attock Petroleum also reported declines in sales.
Conclusion
In conclusion, Pakistan’s petroleum sales have hit a 44-month low, with high fuel prices, economic factors, and the availability of smuggled oil playing pivotal roles. While the current situation poses challenges, potential price reductions and increased border security may help revitalize the petroleum sales market in the near future.
