Karachi, August 2, 2024 – High petroleum prices have significantly impacted the oil sector, reducing sales by 11% year-on-year (YoY) in July 2024, according to research analysts at Arif Habib Limited. Total petroleum sales for the month stood at 1.20 million tons, reflecting the challenging market conditions.
The decline in sales can be attributed to several factors. Firstly, the hike in the prices of petrol (MS) and high-speed diesel (HSD) has led to lower consumption as consumers adjust to the increased costs. Secondly, the availability of smuggled petroleum products from Iran has diverted demand away from legitimate channels. Lastly, there has been a marked decrease in demand for furnace oil (FO)-based power generation.
In detail, the sales of petrol (MS) decreased by 10% YoY in July 2024, amounting to 0.59 million tons. Similarly, HSD offtake fell by 6% YoY to 0.46 million tons. The most significant drop was observed in FO sales volumes, which plunged by 46% YoY to 0.08 million tons.
On a month-on-month (MoM) basis, the dispatch of petroleum products contracted by 17% in July 2024 due to the aforementioned reasons. The offtake of MS plummeted by 16% MoM, while HSD dispatches dwindled by 18% MoM. FO sales saw a reduction of 27% MoM.
Company-wise analysis revealed a substantial drop in sales for Pakistan State Oil (PSO), whose sales plummeted by 19% YoY to 0.55 million tons in July 2024. PSO’s offtake of MS, HSD, and FO contracted by 22%, 22%, and 17% YoY, respectively. Meanwhile, dispatches for Shell (SHEL), Hascol (HASCOL), and Attock Petroleum Limited (APL) witnessed declines of 8%, 12%, and 23% YoY, respectively.
PSO’s market share fell by 4.6%, settling at 45.6% in July 2024 compared to 50.2% in July 2023. APL’s market share also reduced by 1.2%, arriving at 8.5% YoY. In contrast, SHEL’s market share slightly increased to 7.2% from 7.0% in the same period last year. The market share of HASCOL remained unchanged at 3.2%. Notably, the market share of other oil marketing companies (OMCs) climbed by 5.6%, reaching 35.4% in July 2024.
The reduction in petroleum sales underscores the challenging economic environment faced by the oil sector. The combination of high prices, smuggling issues, and reduced demand for FO-based power generation continues to put pressure on the industry. As the market adjusts to these conditions, companies will need to strategize effectively to navigate the ongoing challenges and capitalize on any emerging opportunities.