Pakistan’s oil sales climbed to a 25-month high in November on the back of government efforts to curb smuggling of diesel and motor gasoline from Iran, as well as an increase in demand from the agricultural sector.
According to data provided by the Oil Companies Advisory Council (OCAC), 1.58 million metric tons of petroleum products were sold in November, 15% higher than the 1.37 million metric tons sold during the corresponding period last year. The 25-month high indicates rising demand from industries and ongoing curbs on smuggled products, said Muhammad Iqbal Jawaid, an oil analyst at Arif Habib Ltd., a Karachi-based brokerage house. He said a decline in global oil prices had also facilitated the bump in sales.
Specifically, the price of motor gasoline declined by 12% compared with the same period last year, while the price of diesel slid 15%, he said. Consequently, the data provided by the OCAC shows a 17% boost in motor gasoline sales, 670,000 metric tons, in November 2024, compared to a year prior. Diesel sales similarly increased by 21% to 790,000 metric tons, it added.
A noticeable outlier was furnace oil. Its sales from July to November 2024 declined by 37% to 310,000 metric tons, against the 480,000 metric tons sold in the same period last year. According to analyst Jawaid, this is attributable to a continuous decline in the usage of furnace oil as the government shifts to cheaper modes of electricity generation, including nuclear, gas, coal and hydroelectric sources. This is borne out by government data, which shows that electricity generation from furnace oil-powered plants dropped to 149Gwh in July-October 2024. In the corresponding period last year, furnace oil plants generated 1,184Gwh of electricity.
Of the 50,808Gwh electricity generated in July-October 2024, the bulk was produced through hydroelectric (18,728Gwh); then coal (9,461Gwh); RLNG (9,118Gwh), and nuclear power (7,216Gwh).
The decline in furnace oil consumption has led to refineries exporting the product over the past two years. According to government data, furnace oil exports in the year ended June 30, 2023 was around 279,000 metric tons while it was around 820,484 metric tons the year prior. The past year, refineries also exported light sulfur fuel oil of nearly 134,982 metric tons. In the first four months of the current fiscal year, per the OCAC, exports climbed to 430,503 metric tons compared to 173,247 metric tons in the corresponding period last year. During the same period, refineries exported nearly 26,792 metric ton of light sulfur fuel oil.
If government projections regarding economic stability and growth prove true, analysts believe sales of petroleum products would continue to rise in the coming months of the ongoing fiscal year. According to the federal budget for 2024-25, the Pakistan government estimates the economy will grow by 3.5% against the 2.4% growth recorded last year.