KARACHI: Pakistan exported around 0.78 million tonnes of furnace oil during July-December FY26, as local demand from the power sector and industry remained subdued.
The strong export performance underscores how refiners are increasingly relying on international markets to offload surplus furnace oil amid falling local usage.
Industry officials said furnace oil consumption in Pakistan has been on a declining trend for several years due to a policy-driven transition away from expensive and environmentally unfriendly fuels.
They said that power generation has largely shifted towards RLNG, domestic gas, coal and renewables, leaving furnace oil with a shrinking role in the energy mix. As a result, refineries have been forced to export a significant portion of their production to maintain operational viability.
According to oil industry data, exports remained elevated throughout the six-month period, with particularly strong shipments recorded in the second quarter of FY26.
Industry sources attributed this to limited offtake by public sector power plants and continued restrictions on furnace oil usage in base-load generation. In December alone, exports crossed 0.13 million tonnes, highlighting the persistent imbalance between production and domestic demand.
Industry representatives also noted that Pakistan’s furnace oil exports are influenced by favourable international market conditions. They said some refineries are exporting the bulk of their furnace oil output, with only minimal volumes absorbed locally.
They attributed the surge primarily to the petroleum levy (PL) and the newly introduced climate support levy (CSL), imposed under the Finance Act for the current fiscal year as part of Pakistan’s IMF-backed reforms.
From July 1, furnace oil has been subject to a petroleum levy of about Rs77 per litre along with a climate support levy of Rs2.5 per litre, substantially increasing its domestic price.
The combined impact of these levies has made furnace oil economically unviable for major local consumers, particularly power producers, cement plants and shipping companies. As a result, domestic demand has dwindled to historically low levels, forcing refineries to divert output to export markets to keep operations running.
Despite the rise in exports, industry stakeholders cautioned that heavy reliance on furnace oil exports carries its own risks. International fuel oil markets can be volatile, and margins are often thinner compared with higher-value petroleum products.
Refiners have therefore been urging the government to accelerate refinery upgradation projects that would allow greater conversion of furnace oil into lighter, more valuable fuels.
Meanwhile, industry data also indicates that overall petroleum product demand growth remained modest during the first half of FY26, reinforcing the view that furnace oil’s role in the domestic market will continue to diminish.
