KARACHI: The oil sector has expressed concern over an unusual decline in petroleum product sales during the peak wheat harvesting season, warning of rising inventories, supply chain pressures and potential revenue losses for both industry and the government.
In a letter to the Director General (Oil) at the Ministry of Energy, the Oil Companies Advisory Council (OCAC) reported that high-speed diesel (HSD) sales fell 34 per cent year-on-year (YoY) in May 2026, while motor spirit (MS/petrol) sales declined 14 per cent compared with May 2025.
According to industry data cited by the OCAC, HSD sales dropped to around 455,000 metric tonnes in May 2026, the lowest May level in at least 27 years. The fall is notable as May typically records strong diesel demand due to peak agricultural harvesting activity.
HSD sales fell from 691,000 metric tonnes in May 2025 to 455,000 metric tonnes in May 2026, while MS sales declined from 714,000 metric tonnes to 617,000 metric tonnes over the same period.
The council said actual HSD demand remained 32 per cent below projections, while refinery uplift was 22 per cent lower than regulator allocations. Usable HSD inventories rose to around 640,000 metric tonnes, adding pressure to storage capacity.
The OCAC said the widening gap between inventory build-up and market demand is creating operational challenges across the fuel supply chain, affecting refinery throughput planning, pipeline operations and inventory management.
It also highlighted financial strain on oil marketing companies (OMCs), citing around Rs66.7 billion in pending price differential claims (PDCs). It warned that sustained weak demand could disrupt refinery payments, import financing and overall supply chain stability.
The council suggested that part of the demand decline may be linked to the availability of diesel through alternative and unregulated supply channels, with industry estimates indicating below-market pricing in some inland areas.
The OCAC estimated that such market distortions could result in losses of up to Rs16 billion per month for the national exchequer and around Rs2.5 billion per month for the formal oil industry and dealer network, alongside reduced tax collection and weaker profitability across the regulated fuel chain.
It urged the Ministry of Energy to investigate the causes of the decline in diesel demand, address potential market distortions and safeguard refinery operations, warning that timely intervention is needed to maintain stability in the petroleum supply chain and protect government revenues.overall supply chain stability.
The council suggested that part of the demand decline may be linked to the availability of diesel through alternative and unregulated supply channels, with industry estimates indicating below-market pricing in some inland areas.
The OCAC estimated that such market distortions could result in losses of up to Rs16 billion per month for the national exchequer and around Rs2.5 billion per month for the formal oil industry and dealer network, alongside reduced tax collection and weaker profitability across the regulated fuel chain.
It urged the Ministry of Energy to investigate the causes of the decline in diesel demand, address potential market distortions and safeguard refinery operations, warning that timely intervention is needed to maintain stability in the petroleum supply chain and protect government revenues.
