KARACHI: Domestic oil sales in Pakistan posted a three percent year-on-year growth in July 2020, driven by a surge in demand for furnace oil used in power generation and a general revival of economic activity. This growth reflects improved industrial operations and enhanced mobility following the easing of COVID-19 restrictions.
According to industry data, total domestic oil sales reached 1.653 million tons in July 2020, up from 1.610 million tons during the same month in the previous year. The increase is primarily attributed to a higher consumption of furnace oil, which became more economically viable due to falling international prices.
Analysts at Topline Securities noted that lower furnace oil prices incentivized increased fuel-based power generation. This, combined with a gradual return to economic normalcy, particularly in manufacturing and transportation sectors, provided a boost to overall domestic oil demand.
One of the key highlights was the rise in fuel consumption for transport, as inter-city travel resumed more broadly. High-speed diesel (HSD) sales jumped by 15 percent year-on-year, while motor spirit (MS) — commonly known as petrol — saw an 8 percent year-on-year increase. These trends further underscore the uptick in mobility and commercial transport, both crucial components of domestic oil consumption.
Despite the overall rise in domestic oil sales, Pakistan State Oil (PSO) saw a month-on-month decline of 5 percent in its sales, largely due to competitors regaining their market share. In June 2020, PSO had benefited from depleted inventories at rival oil marketing companies (OMCs), but July witnessed a reversal.
HASCOL Petroleum reported a strong recovery, with a 25 percent month-on-month increase in sales. Its market share in HSD climbed from 4.3 percent to 6.1 percent, and in MS from 5.3 percent to 6.7 percent. Similarly, Shell Pakistan Limited (SHEL) improved its monthly sales by 13 percent, expanding its market presence in both petrol and diesel segments.
With improving economic conditions and energy demand, domestic oil sales are expected to remain strong in the coming months, reinforcing the sector’s role in supporting Pakistan’s post-pandemic recovery.