Higher Fuel Prices Keep Pakistan’s Oil Demand Subdued

Pakistan’s petroleum demand remained under pressure throughout FY2025-26 as elevated fuel prices, higher petroleum levy rates, and subdued economic activity continued to weigh on consumption, according to the latest oil sales update released by Intermarket Securities based on data published by the Oil Companies Advisory Council (OCAC).

The report shows that aggregate sales by Oil Marketing Companies (OMCs) remained broadly unchanged during FY2025-26 at 16.191 million tonnes, while June 2026 sales declined 20% year-on-year to 1.258 million tonnes. On a month-on-month basis, however, total OMC sales recovered by 7% from 1.172 million tonnes recorded in May 2026.

According to the report, higher domestic petroleum prices, increased Petroleum Development Levy (PDL) rates, and weak economic activity continued to suppress fuel demand throughout the financial year, particularly during the second half of FY2025-26 amid heightened geopolitical tensions in the Middle East.

Motor Spirit (MS) sales reached 649,000 tonnes in June 2026, representing a decline of 11% compared to 732,000 tonnes recorded in June 2025, while increasing 5% over 617,000 tonnes sold in May 2026. On an annual basis, Motor Spirit sales posted marginal growth of 1%, increasing to 7.677 million tonnes during FY2025-26 from 7.599 million tonnes in the preceding fiscal year.

High-Speed Diesel (HSD) sales fell 20% year-on-year to 497,000 tonnes in June from 618,000 tonnes a year earlier. Compared with May 2026, monthly HSD volumes improved by 9% from 455,000 tonnes. Full-year HSD sales declined slightly to 6.851 million tonnes in FY2025-26, compared with 6.891 million tonnes in FY2024-25.

Furnace Oil (FO) continued to be the weakest-performing product category, with June sales falling 68% year-on-year to 41,000 tonnes from 129,000 tonnes in the corresponding month last year. Despite the annual decline, monthly sales increased 41% from 29,000 tonnes recorded in May 2026. Overall Furnace Oil demand declined 26% during FY2025-26, falling to 599,000 tonnes from 806,000 tonnes in the previous financial year.

Sales of other petroleum products totalled 70,000 tonnes during June, reflecting declines of 18% year-on-year and 2% month-on-month. Nevertheless, annual sales within this category increased 4% to 1.064 million tonnes, compared with 1.026 million tonnes in FY2024-25.

Among individual Oil Marketing Companies, Pakistan State Oil (PSO) recorded June sales of 527,000 tonnes, representing a 20% year-on-year decline from 661,000 tonnes, although volumes increased 2% compared with May 2026. PSO’s total sales for FY2025-26 declined 4% to 6.872 million tonnes, compared with 7.188 million tonnes in the previous fiscal year.

PSO’s June Motor Spirit sales declined 21% to 252,000 tonnes, while High-Speed Diesel volumes fell 22% to 211,000 tonnes. Furnace Oil sales dropped sharply by 83%, reaching only 2,000 tonnes during the month.

Attock Petroleum Limited (APL) reported June sales of 104,000 tonnes, down 21% year-on-year but 7% higher than May 2026. Annual sales declined 7% to 1.332 million tonnes, compared with 1.429 million tonnes in FY2024-25.

APL’s Motor Spirit sales decreased 7% year-on-year to 54,000 tonnes, while High-Speed Diesel volumes declined 16% to 43,000 tonnes. Furnace Oil sales also dropped 78%, settling at 4,000 tonnes.

WAFI Energy recorded June sales of 117,000 tonnes, reflecting an 8% annual decline but a 13% monthly increase. During FY2025-26, WAFI remained one of the stronger performers, with annual sales increasing 10% to 1.320 million tonnes, up from 1.200 million tonnes recorded in FY2024-25.

Its June Motor Spirit sales remained broadly unchanged at 69,000 tonnes, while High-Speed Diesel sales declined 5% to 46,000 tonnes. On a full-year basis, Motor Spirit sales increased 3% to 731,000 tonnes, whereas High-Speed Diesel volumes rose 23% to 521,000 tonnes.

Gas & Oil Pakistan Limited (GO) reported June sales of 119,000 tonnes, down 31% year-on-year and 3% lower than May 2026. Despite the weaker monthly performance, GO’s FY2025-26 sales increased 9% to 1.867 million tonnes, compared with 1.707 million tonnes during FY2024-25.

GO’s Motor Spirit sales declined 2% year-on-year to 76,000 tonnes, while High-Speed Diesel sales fell 55% to 42,000 tonnes. According to the report, GO recorded the weakest HSD performance among major OMCs during June, primarily due to supply disruptions linked to developments in the Middle East.

Market share data indicates that PSO experienced the largest decline among major OMCs during FY2025-26, with its market share falling 1.6 percentage points to 42.4%. In contrast, GO and WAFI Energy strengthened their market positions, with market shares increasing by 1.1 percentage points and 0.8 percentage points, reaching 11.5% and 8.2%, respectively.

The report concludes that petroleum demand remained constrained during June as elevated fuel prices continued to dampen economic activity. However, it notes that oil sales could recover during FY2026-27, supported by easing geopolitical tensions in the Middle East, lower international oil prices, improved domestic business activity, and a more growth-oriented federal budget.

The report further cautions that any sustained recovery in petroleum demand will depend on continued enforcement against fuel smuggling, as the significant tax burden on petroleum products continues to create incentives for illicit trade.