Petroleum consumption in the country was seen growing in September-2024 as the OMCs reported robust sales in September 2024, achieving a 20 percent year-on-year increase, with total volumes reaching 1.27 million tons. This growth was fueled by a significant rise in retail fuel sales, particularly motor spirit (MS) and high-speed diesel (HSD), which surged by 22.5 percent and 25.5 percent year-on-year, respectively.
The increase in demand was driven by consecutive cuts in fuel prices, improved transport mobility after monsoon rains, and a recovering economy. The price reductions, including a PKR 12-16 per liter cut, played a pivotal role in boosting sales volumes. The growth in HSD volumes in September 2024 also stemmed from a low base in September 2023, following the sharp price hikes last year. Conversely, furnace oil (FO) sales dropped 18 percent year-on-year to 69,000 tons, reflecting a reduction in furnace oil-based power generation.
Despite the positive trend in September, the OMC sector faced challenges earlier in the fiscal year. FY24 saw the lowest total annual sales in 18 years, clocking in at 15.3 million tons, an 8 percent decline from FY23. However, OMC sales rebounded in June 2024, hitting a 19-month high of 1.45 million tons, thanks to reduced fuel prices and a seasonal rise in demand. This continued in August and September.
Overall, in 1QFY25, the growth remained in the negative zone, especially for furnace oil, which was down by 39 percent year-on-year. HSD volumes were down by one percent, while the MS volumes were flat in 1QFY25.
Looking ahead, OMC sales are expected to see a modest recovery, supported by falling fuel prices and a resurgence in industrial activity. However, challenges persist in the form of rising Petroleum Development Levy (PDL) rates and geopolitical factors influencing crude prices. So, while the OMC sector has rebounded from a challenging FY24, with notable growth in September 2024, its future performance will depend on managing external factors like fuel price volatility, economic recovery, and PDL adjustments.
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