Oil industry projects higher fuel demand for March as wheat harvest nears

KARACHI: The oil sector has projected a higher demand for petroleum products, especially high speed diesel (HSD), in March 2024, as the wheat harvesting season approaches.

The demand for HSD is expected to reach 590,000 tonnes in March, up from 514,000 tonnes in February, according to the projections presented by the oil sector in a meeting with the Oil & Gas Regulatory Authority (OGRA) last week. The demand for petrol is also projected to increase to 625,000 tonnes in March, from 597,000 tonnes in February.

The consumption of HSD and petrol has seen a drop in the month of February this financial year as the demand slumped due to high prices of both products as well as the smuggled petroleum products from the neighbouring country, Iran.

“The reason behind the higher projection of petroleum products, particularly HSD, is the arrival of the wheat harvesting season, which would set in by mid of next month,” an industry official said. "The petrol consumption may also see an increase in the next month."

The official said that the oil sector always gives higher projections to avoid any shortage and added that the projections for March are realistic because of the expected surge in their demand.

The consumption of HSD has seen a drop so far in the month of February. The demand for HSD was put at 514,000 tonnes, however its sale so far is not up to the demand. The consumption of HSD dropped by 18 percent so far in February as it is still 18 percent short of its projected consumption.

Its consumption also fell by 11 percent so far in the current month as the same period of February 2023 witnessed consumption of 230,000 tonnes, which is 204,000 tonnes in the first half of this February. In the first half of January, HSD consumption stood at 247,000 tonnes, which is higher by 18 percent compared to the first half of February 2024.

The petrol consumption in the first half of February also fell 12 percent short of its demand. The consumption in the first half of February 2023 was 267,000 tonnes, which decreased to 246,000 tonnes in the first half of this month, showing a decline of eight percent. The figures showed that consumption in the first half of this month also dropped as compared to the same period of January this year when total consumption was 297,000 tonnes, indicating negative growth of 18 percent.

Industry officials attributed the fall in the sales to higher prices of these products as well as the smuggled Iranian products, which are still finding their way into Pakistan because of their lower price.