The recent fluctuation in petroleum prices over the past few months has triggered not only a fresh wave of hyperinflation in Pakistan but also Pakistan’s Petroleum Sales Hit 44-month Low Amidst Price Volatility. The demand for petrol and diesel is witnessing a steady decline each month, primarily attributed to Iranian smuggled oil, decreased power generation relying on furnace oil, and sharp spikes in oil prices.
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Reduced Sales and Economic Slowdown
According to a recent report in local media, petroleum sales have plummeted to their lowest point in 44 months. Economic analyst Abdul Rehman, in a tweet, highlighted the severe downtrend in diesel sales, primarily since the onset of the Covid-19 lockdown. Experts also point to economic stagnation and declining automobile sales as contributing factors to the decreased petroleum demand in September.
Hope on the Horizon
However, there is hope on the horizon. Recent reductions in petrol and diesel prices, coupled with enhanced border security measures, are expected to provide a boost to oil sales in the upcoming month.
Interpreting the Sales Figures
In September, Pakistan experienced a sharp 31% year-on-year (YoY) and a 25% month-on-month (MoM) drop in monthly sales, totaling 1.06 million tons. High-speed diesel (HSD) sales hit a new low since the COVID-19 lockdown, with a total of 394,000 tons in September 2023, reflecting a substantial 24% YoY and a 28% MoM decline, largely attributed to rising prices.
The cost of HSD surged by 12%, escalating from Rs. 293 per liter in August 2023 to Rs. 330 in September 2023. Petrol sales followed a similar trend, experiencing an 18% YoY and a 23% MoM drop, with 518,000 tons sold in September 2023, the lowest figure recorded since March 2020. The decline was primarily attributed to a significant increase in petrol prices, which surged by 14%, reaching Rs. 331 from Rs. 290 per liter in August.
Furthermore, furnace oil sales witnessed a staggering 72% YoY and a 28% MoM decrease, totaling 84,000 tons due to reduced demand for oil-based power generation.
In the first quarter of FY24, sales of petroleum products observed a YoY decline of 16%, amounting to 3.77 million tons compared to the 4.49 million tons reported in the same period last year.