By Staff Reporter
KARACHI: Pakistan’s petroleum sales fell to their lowest level for any May in 13 years last month, as retail fuel prices above Rs400 per liter squeezed household budgets, curtailed transport activity, and compounded the demand hit from the Eid Al-Adha holiday, according to data compiled by Arif Habib Limited Research.
Total petroleum product sales dropped 23% year-on-year to 1.17 million tons in May, the brokerage’s report showed Tuesday. Stripping out furnace oil — a residual fuel used primarily in power generation that distorts headline volumes — sales by oil marketing companies fell to 1.14 million tons, the weakest figure for the month since May 2013, down 21% from a year earlier and 7% from April.
The numbers land with particular force given their timing. Pakistan is set to unveil its federal budget on June 10, and policymakers are navigating a delicate balance between fiscal consolidation and an economy still fragile after a bruising IMF-led stabilization program. Elevated energy costs have been a persistent drag: average petrol prices climbed 59% year-on-year to Rs402 per liter in May, while high-speed diesel — the lifeblood of freight, agriculture, and commercial transport — rose 57% to Rs401.46 per liter, the Arif Habib data show.
The government moved to ease the burden near month-end, trimming fuel prices by Rs22 per liter on May 29 to bring both petrol and diesel to roughly Rs380 per liter. But the relief arrived too late to materially shift May’s consumption figures, with elevated prices in force for the bulk of the month.
Diesel’s performance was starker still. Sales of high-speed diesel fell to 0.45 million tons — the lowest volume ever recorded for the month of May — underscoring the breadth of the demand contraction across freight and agriculture. Petrol sales declined 12% year-on-year.
Arif Habib attributed the weakness to a combination of price-driven demand destruction and subdued economic activity during the Eid Al-Adha period, when commercial and industrial activity typically slows across the country.
The slump does not appear to have derailed the government’s revenue arithmetic, at least not yet. Cumulative petroleum sales in the first 11 months of fiscal year 2025-26 edged 1% higher year-on-year to 14.93 million tons, a modest recovery after years of compressed volumes. Petroleum levy collections over the same period are estimated at Rs1.39 trillion ($5.0 billion), leaving the government roughly Rs80 billion short of its full-year target of Rs1.47 trillion ($5.3 billion) with one month remaining in the fiscal year.
Whether that gap closes will depend in part on the trajectory of global crude prices — and on how quickly the Rs22 reduction at the pump translates into a demand response. Global oil markets have remained unsettled amid tensions over Iran, a dynamic that poses upside risk to import costs for an economy that relies almost entirely on overseas purchases to meet its energy needs.
For Pakistan’s oil marketing companies — a sector that has grappled with inventory losses and compressed margins through much of the current price cycle — the data offer little near-term comfort. Volumes remain under structural pressure, and the budget on June 10 will be closely watched for any changes to the petroleum levy framework, which has become one of the government’s most reliable non-tax revenue instruments.
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