The oil sales by the oil marketing sector during the first seven months of FY24 continued to decline with a year-on-year fall for the period at 13 percent to a little over 9 million tonnes of sales by the oil marketing companies. This decline was seen across key products like furnace oil, and High speed diesel that were down by (22 and 2 percent year-on-year respectively), while petrol sales were flattish with a 2 percent year-on-year growth.
Monthly petroleum sales by the OMCs for January 2024 stood at 1.38 million tones, which was lower by around 4 percent year-on-year The decline was around 12 and 5 percent respectively for high-speed diesel and petrol, while the month-on-month decline stood at around 7.5 percent for petrol and less than one percent for diesel. This came on the back of weak economic activity, and rising petroleum product prices over the last year. However, the furnaceoil volumes shot up drastically during the month with 22 percent on a year-on-year and 133 percent on a month-on-month basis. This growth came on the back of the resumption of furnace oil consumption in the power sector during the month with weak hydropower generation. As per a research note by ‘Optimus Capital Management’, the rise in furnace oil demand from the power sector was due to the closure of Neelum-Jhelum Hydropower and seasonal decrease in hydel flows, as well as lower generation from gas due to tripping issues, along with transmission constraints for power evacuation from South to North.
While previously there were hopes of a revival in volumetric sales with some improvement in economic activity and the falling petroleum price environment previously, the risk factors for the OMCs have increased. First of all the geopolitical situation in the Red Sea has been escalating with international oil prices already significantly up; petroleum prices for Feb have already been raised in the recent fortnightly revision, and are likely to be revised up again come 16-Feb. This will affect the OMC sales in the coming months.
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