Tuesday Aug 02 2022

High prices dent demand: Oil sales decline 26%, reach lowest after Feb 2021

A representational image of oil barrels. — Reuters/File
A representational image of oil barrels. — Reuters/File

  • High-speed diesel record lowest monthly sales in last 18 year.
  • Petrol sales record lowest monthly sales in over last six years.
  • Analysts cite increase in prices, monsoon rains as reasons behind decline.

KARACHI: In line with the coalition government’s efforts to reduce oil import bills, the country witnessed a decline in the sales of the oil marketing companies during July, data released by Oil Companies Advisory Council (OCAC) on Monday showed.

Total petroleum and lubricant sales clocked in at 1.44 million tonnes in July 2022, a decrease of 26% on a year-on-year and month-on-month basis — the lowest sales since February 2021, Topline Securities reported.

Data compiled by Ismail Securities noted that high-speed diesel sales in the month of July were the lowest in the last 18 years while petrol sales recorded the lowest monthly sales in July over the last six years period.

Among reasons that contributed to the decline in petroleum products consumption during the month:

  • Significant increase in hi-speed diesel and petrol prices
  • Ongoing heavy spells of monsoon rains
  • High domestic inflation
  • Significant slowdown in economic activities

It should be noted that petrol is mostly used by two, three and four-wheeler vehicles, while diesel is mostly consumed by the industrial and agriculture sectors.

Topline Securities CEO Mohammad Sohail said a massive fall in oil consumption in Pakistan has been reported.

He cited two reasons behind the decline:

  • Elasticity of demand
  • Higher price

He further added that oil sales were down close to 35% in last two months. From 2.2 million tonnes in May to 1.4 million tonnes in July. “This [decline] will save billions of dollars, however, it will slow down the economy,” he noted.