Pakistan’s oil marketing companies (OMCs) recorded a noticeable decline in petroleum product sales during May 2026, as industry volumes fell 23% year-on-year and 14% month-on-month to 1.17 million tons.
The downturn reflects continued pressure from elevated fuel prices, weakening demand patterns, and the fading impact of earlier seasonal support.
Market data shows that the decline is largely in line with expectations of delayed demand destruction following a sharp fuel price shock earlier in the year.
That impact had initially been absorbed through consumer stockpiling and seasonal demand linked to the Rabi harvesting cycle. However, as those effects faded, overall consumption began to weaken more visibly.
During most of May, petrol and diesel prices remained above Rs400 per litre, before easing slightly to around Rs382 per litre toward the end of the month. The late-month reduction provided limited relief and was not enough to reverse the broader demand slowdown.
On a cumulative basis, industry volumes for 11MFY26 stood at 14.93 million tons, reflecting a marginal increase of just 1% year-on-year. However, analysts note that the earlier growth momentum of 4–5% seen in the first nine months of FY26 has largely been wiped out within just two months of weaker demand conditions.
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Motor spirit (MS) showed relative resilience compared to other fuels, falling 12% year-on-year to 617,000 tons while remaining unchanged on a monthly basis.
This stability was supported by several factors, including provincial motorcycle subsidy schemes in Punjab and Sindh, steady mobility demand from an expanding vehicle base, improved sentiment after mid-month price cuts, and increased travel activity during Eid.
In contrast, high-speed diesel (HSD) remained the biggest contributor to the overall decline. Sales dropped 32% year-on-year and 17% month-on-month to 455,000 tons. The pressure came from persistently high diesel prices over the past few months, earlier advance buying, and reduced transport activity during the Eid period.
Furnace oil (FO) witnessed an even sharper fall, plunging 64% year-on-year and 79% month-on-month to just 29,000 tons. The sharp drop reflects continued displacement of furnace oil in power generation as RLNG supply conditions improved.
Jet fuel (JP), however, moved against the trend, rising 35% year-on-year and 14% month-on-month, supported by seasonal Hajj-related travel and lower ex-refinery pricing.
Pakistan State Oil (PSO) continued to dominate the market despite the overall downturn, posting sales of 518,000 tons in May 2026. This represented a 19% year-on-year and 12% month-on-month decline, but its market share improved to 44.2% compared to 41.9% in the same period last year, indicating relative stability in a weak market.
Among mid-tier players, Wafi Energy delivered a comparatively better performance, with volumes of 103,000 tons. Its market share also improved to 8.8%, up from 8.1% a year earlier.
Other segments of the market also reflected mixed performance. Some products remained under pressure due to shifting energy consumption patterns, while others saw temporary support from seasonal and travel-related demand. Overall, the trend highlights a broad-based slowdown across the petroleum sector.
On the fiscal side, petroleum development levy (PDL) collections reached Rs1.38 trillion during the first 11 months of FY26, leaving a gap of around Rs110 billion to meet the full-year target of Rs1.47 trillion.
Looking ahead, the government has set a higher PDL target of Rs1.73 trillion for FY27, reflecting an 18% increase. Analysts believe the target remains achievable, assuming gradual normalization in global oil prices and a recovery in domestic economic activity.
Despite the current weakness, the medium-term outlook for the sector remains cautiously positive, with expectations of around 4% volume recovery in FY27, supported by improving macroeconomic conditions and relatively stable fuel pricing.
