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Petroleum sales in the country witnessed a sharp decline in July 2022. The oil and gas sector was seen commencing the fiscal year on a weaknote with overall petroleum sales by the oil marketing sector falling by 26 percent both year-on-year and month-on-month. The three key petroleum products registered a double digit month-on-month decline in July 2022 with furnace oil falling by 23 percent, while diesel and petrol sales fell by 28 and 15 percent, respectively. As compared to the previous year, sales declined by 5, 38 and 37 percent for furnace oil, diesel and petrol, respectively.

The fall in petrol (motor gasoline) consumption was primarily due to substantial increase in petrol prices, while month-on-month decline was also assisted by week long Eid holidays, (school summer holidays and extreme weather conditions such as harsh monsoon rains.

Decline in HSD sales is linked to weaker economic and transport activity, while the month-month decline was also due to heavy rains across the country.

Furnace oil sales also depicted slowdown in sales where demand dwindled due improved hydel flows amid heavy monsoon showers and lower electricity demand.

Given the conditions, consumption of petroleum products is expected to decline, and FY23 is slated to be a year with slow volumetric growth. It is being estimated that FY23 may witness around 1-20 percent year-on-year decline in OMC sales and petroleum consumption. A decline in volumes in the new fiscal is anticipated due to higher petroleum prices particularly of retail fuels and weakening economic activity, slower agriculture growth, falling auto sales amid rising inflation. Apart from this, furnace oil sales that have been rising with increased consumption in the power sector are also expected to decline as demand falls amid falling aggregate demand. Unabated consumption of petroleum products seems to be finally coming down after years of continuous rise.

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