Oil sales 8MFY25: Slow-paced growth

The country’s oil marketing companies (OMCs) experienced a mixed performance in February 2025, with total petroleum sales reaching 1.14 million tons, reflecting a two percent year-on-year increase but an eighteen percent decline compared to January. The cumulative industry offtakes for the first eight months of FY25 stood at 10.55 million tons, registering a four percent year-on-year growth. The month-on-month decline was primarily driven by fewer days in February, higher petroleum prices, and a reduction in fuel-based power generation.

Among petroleum products, motor spirit (MS) sales stood at 0.56 million tons in February, showing a two percent increase compared to the same month last year but an eleven percent drop from January. The modest year-on-year increase was attributed to resurgent demand, lower petrol prices, curbs on smuggled fuel from Iran, and higher automobile sales. High-speed diesel (HSD) sales declined to 0.43 million tons, reflecting a four percent year-on-year decrease and a sharp twenty-nine percent drop compared to January. The month-on-month decline was mainly due to the conclusion of the Rabi sowing season, which reduced agricultural demand. Furnace oil (FO) sales, on the other hand, reached 0.05 million tons, registering a seven percent increase compared to the previous year but a nine percent decline from the previous month. The overall demand for furnace oil remains under pressure as the country shifts away from FO-based power generation. Meanwhile, high-octane blending component (HOBC) sales surged to 33,000 tons, marking a two hundred eighty-four percent increase year-on-year, driven by a narrower price difference between premium and regular fuel.

Looking ahead, the market expects the petroleum sector to see moderate growth of around three percent in FY25, supported by lower fuel prices and a recovery in commercial and industrial activity. The demand for HSD is expected to stabilize following the seasonal drop due to the end of the Rabi season, while MS sales are likely to continue growing, driven by increasing vehicle sales and relatively lower fuel prices. However, furnace oil demand is expected to remain under pressure as the reliance on FO-based power generation declines. While the petroleum sector showed resilience in the first eight months of FY25, the sharp decline in February highlights ongoing seasonal and economic challenges that could impact the market in the coming months.