In Karachi, the demand for petroleum oil products surged to a 21-month high of 1.15 million tonnes in March, showcasing a positive trend towards economic stability. Data from the Oil Companies Advisory Council (OCAC) revealed that oil marketing companies (OMCs) experienced a 4% increase in sales compared to the same period last year and a 3% rise from the previous month of February.
Premium products such as petrol and diesel saw a significant uptick of 9% in March 2024 compared to the previous year and a 4% increase month-on-month. Analysts like Ayesha Sohail from Topline Research noted that this increase reflects a resurgence in economic activities, marking the first YoY growth in oil sales in 21 months.
The surge in demand can be attributed to several factors. The anticipation of price hikes might have led to advanced purchases of premium products, contributing to bulk sales. Furthermore, the start of the wheat harvesting season boosted diesel demand, primarily used in tractors for agricultural purposes. Additionally, a rise in car sales contributed to the overall demand for petroleum products.
Despite these positive indicators, the market could have experienced even higher demand if not for smuggling activities. Reports suggest that around 4,000 tonnes of oil are smuggled daily from Iran, impacting the domestic market’s dynamics.
Motor spirit (petrol) sales increased by 3% YoY and 5% MoM to 573,000 tonnes, while high-speed diesel (HSD) sales rose by 17% YoY and 4% MoM to 463,000 tonnes in March 2024. However, sales of furnace oil (FO) decreased significantly by 48% YoY and 11% MoM to 44,000 tonnes due to reduced power generation from FO-based plants.
Despite the positive monthly trend, the cumulative demand for petroleum products fell by 11% in the first nine months of the fiscal year 2023-24, primarily due to a 5% decrease in sales excluding FO. The increase in petrol and diesel prices by 19% and 16% YoY, respectively, contributed to a decline in sales volume over the nine-month period.
Looking ahead, analysts anticipate continued pressure on sales (excluding FO) for the full fiscal year 2023-24, especially if government policies lead to further price increases or taxation adjustments, impacting consumer purchasing power and overall market dynamics.
Story by Salman Siddiqui
