Oil transactions surge in the fiscal year 25

Oil transactions surge in the fiscal year 25

Pakistan's oil marketing companies (OMCs) experienced a significant recovery in petroleum sales during fiscal year 2025 (FY25), with several key factors driving this growth.

## Key Factors Behind the Recovery

### Economic Recovery and Increased Activity

There was a gradual economic recovery that boosted demand for petroleum products across sectors. This was reflected in a 7% year-on-year increase in total sales for FY25, reaching 16.32 million tons compared to 15.28 million tons in FY24. Improved economic activity and a pickup in momentum contributed to the surge in sales, particularly during the latter half of the fiscal year.

### Reduction in Fuel Smuggling

Tighter border controls and regional tensions, especially with Iran, led to a significant reduction in illegal fuel smuggling. This allowed OMCs to regain market share and push volumes higher. The decline in smuggling resulted in more sales being channeled through official domestic outlets, benefiting both large and smaller OMCs.

### Fuel Price and Demand Dynamics

Expectations of local fuel price hikes, driven by rising global oil prices—partly due to conflict in the Middle East—led consumers and businesses to increase purchases before price adjustments. Sales of high-speed diesel (HSD) and motor spirit (MS) saw surges during specific periods, such as the wheat harvest, which required additional agricultural fuel usage. Elevated gas prices prompted a shift from captive power to fuel oil-based power generation, especially during periods of electricity grid demand, further supporting FO sales.

### Market and Regulatory Factors

Some companies, like Wafi Energy and Hascol Petroleum, posted strong monthly gains, indicating improved market strategies and possibly more competitive pricing or distribution. Analysts observed a return to normalized consumer and industrial demand patterns as economic uncertainty reduced, supporting sustained sales growth.

## Summary Table

| Factor | Impact on Petroleum Sales | |-------------------------------|-----------------------------------------| | Economic recovery | Increased industrial and consumer demand| | Reduced fuel smuggling | Higher official sales volumes | | Price hike anticipation | Preemptive bulk purchases | | Seasonal agricultural demand | Surge in HSD and MS sales | | Shift to fuel oil generation | Boosted furnace oil sales | | Market competition | Stronger sales for niche/agile OMCs |

Overall, the recovery in petroleum sales for Pakistan’s OMCs in FY25 was driven by a combination of macroeconomic recovery, stricter controls on smuggling, anticipation of price hikes, seasonal factors, shifts in power generation, and improved market competition.

Total oil sales in June 2025 stood at 1.57 million tons, up 8% year-on-year and 2% from May. The anticipation of rising local prices in June contributed to the monthly growth in sales. June 2025 saw a temporary surge in FO sales, which jumped 62% month-on-month and 22% year-on-year to 129,000 tons, due to pre-buying ahead of an expected imposition of petroleum development levy (PDL) from July. Government price adjustments in response to global crude trends helped ease pressure on retail buyers and transport operators. The growth in petroleum sales was primarily driven by increased consumption of motor spirit (MS) and high-speed diesel (HSD). MS sales rose by 6% to 7.6 million tons, supported by higher automobile sales and relatively lower fuel prices compared to the previous year. The growth in HSD volumes was due to improved agricultural and transport sector activity during parts of the year, although seasonal variations remained a factor.

1. The recovery in petroleum sales for Pakistan's OMCs in FY25 was influenced by risk-taking measures, as consumers and businesses anticipated local fuel price hikes to stock up on petroleum products before potential price adjustments.
2. The positional advantage of certain companies, such as Wafi Energy and Hascol Petroleum, in responding to market trends and possibly employing more competitive pricing or distribution strategies contributed to their strong monthly gains.
3. The growth in petroleum sales was not only driven by economic recovery and reduced fuel smuggling but also by the growth in finance, specifically in business areas like agriculture, where the demand for high-speed diesel (HSD) and motor spirit (MS) saw an increase due to seasonal agricultural activities.

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