Sales of petroleum products have seen a rebound month-on-month. This was expected to happen as the near two-month lockdown was lifted in early May 2020. As restrictions were lifted, revival of businesses resulted a surge in petroleum consumption despite the Ramzan, which usually has been a slower month for economic activity. Total petroleum sales in May 2020 surged by over 9 percent versus April 2020 with all three key products showing growth. High speed diesel (HSD) sales were up by 26 percent month-on-month; motor spirit was up by 46 percent; and furnace oil grew by over a 100 as mercury level started rising, wheat harvesting continued, cars and motorcycles took the road, and offices, businesses and shops resumed work.

A contributing factor to the rise in petroleum consumption in May 2020 was also the decline in petroleum prices. In May 2020, prices fell by 15-25 percent for diesel and petrol where the impact of oil prices was partially passed on to the consumers.

However, on year-on-year basis, both monthly and aggregate petroleum sales by the oil marketing companies are still lower. May 2020 was in the middle of a pandemic versus a regular May 2019; furnace oil and diesel sales by the OMCs were lower than May 2019. Another casualty of restrictions imposed to control spread of COVID-19 is jet fuel, which was down 22 percent month-on-month, and 91 percent down on a year-on-year basis as most of flight operations remain suspended. A look at 11MFY20 sales show that FY20 would be a weaker for all petroleum products including furnace oil, motor spirit and high speed diesel.

On one hand, hopes are up for a month-on-month recovery in June 2020 as more businesses start reopening and consumption also benefits for a further ease in prices earlier this month. On the other hand, the shortage created by Rs7 fall in prices might keep a lid on OMC sales.