- Economic rebound and fuel price decline supported the volume
According to Intermarket Securities volumes of oil marketing companies closed FY25 on a positive note. Total industry sales were up 8%YoY and 2%MoM in June 2025 to 1.6 million tons.
The YoY recovery was driven by a 9% increase in HSD sales, 5% in MS, and a 22% surge in Furnace oil (FO) volumes to 129,000 tons.
On a MoM basis, overall growth remained modest as an 8% decline in HSD was partially offset by a 5% rise in MS and a sharp 62% jump in FO.
This took cumulative FY25 OMC volumes to 16.3 million tons, up 7%YoY, marking the first annual increase after two years of decline.
The recovery is largely attributable to lower white oil prices (MS and HSD down 23% and 21% from their respective peaks in FY24), a rebound in macroeconomic indicators, and stricter enforcement against fuel smuggling.
Petrol (MS) sales rose YoY and MoM in June 2025 to 732,000 tons, supported by a 40% increase in auto sales, lower fuel prices, and anti-smuggling measures.
Monthly growth was further supported by reduced smuggling due to border closures. FY25 petrol sales reached 7.6 million tons, up 6%YoY.
However, PSO and APL’s sales declined by 4% and 2%, respectively, amid rising competition from smaller OMCs, particularly GO Petroleum, resulting in a drop in their market shares to 41% and 8%, respectively.
Diesel (HSD) volumes grew 9%YoY to 618,000 tons but fell 8% MoM due to a seasonal slowdown in agricultural activity. Annual growth was supported by a reduction in diesel prices (down 4% to PKR258.62/ltr), improved industrial activity, and effective control over illegal inflows. FY25 cumulative HSD sales stood at 6.9 million tons, up 10% YoY.
PSO’s diesel market share dropped to 46%, reflecting increased competition from emerging players.
Furnace Oil (FO) sales increased by 22%YoY and 62% MoM in June to 129,000 tons, likely due to higher demand from the power sector. Nonetheless, FY25 FO volumes declined by 23%YoY to 806,000 tons, reflecting a structural shift away from FO-based power generation.
Overall, PSO and APL’s market shares in FY25 declined to 44% and 9%, respectively, while GO Petroleum captured a notable 10% market share from 3% last year.
The recovery in OMC sales during FY25 was largely supported by improved economic activity, effective anti-smuggling efforts, and a decline in petroleum product prices.
However, this momentum may face headwinds in the coming months due to the recent increase in regulated fuel prices. Furthermore, the government has imposed a petroleum levy on furnace oil and introduced a carbon levy of PKR2.5/litre on MS, HSD, and FO. These developments are expected to raise domestic fuel prices, which could weigh on future demand.
PDL collection
OMC sales have grown by 7%YoY during FY25, where AKD Securities estimates authorities to have amassed PKR1.19 trillion under the Petroleum Development Levy (PDL) head, slightly exceeding the revised collection target of PKR1.16 trillion for the year.
Overall, with the end of prescribed upper limit to PDL, the brokerage house expects the authorities to comfortably achieve the PKR1.47 trillion budgeted target for FY26, even assuming muted growth in volumes and PDL at PKR78/liter. The imposition of a carbon levy of PKR2.5/liter is expected to generate additional PKR46 billion during the year, aimed at subsidizing the NEV Policy 2025-30 to promote localization for EV-based 2/3 wheelers.
Investment perspective
AKD Securities maintains its growth projection of 7%YoY for sector sales during FY26, led by relatively fuel prices and anticipated recovery in commercial/ industrial activity. However, incidence of higher oil prices and fiscal need to raise PDL above current levels stand as a risk to the growth estimates. This, along with, increase in OMC margins and resolution of gas circular debt would make a strong case for the OMCs sector.
Global markets
Trading activity was thin towards the end of this week as the United States celebrates Independence Day – with a record breaking 72 million people traveling – but both ICE Brent and WTI edged slightly lower on expectations of OPEC Plus hiking production targets again in August. Whilst OPEC Plus meeting seems to be a rather predictable affair, next week’s big price moves will be dictated by the July 09 tariff deadline as Asian countries try their luck with last minute negotiations with US President Donald Trump.