Analyzing Consumption Patterns, Rising Imports, and the Impact of Geopolitical Risks
As per the government of Pakistan report, during July-March FY 2025, total sectoral consumption of petroleum products reached at 13.17 million metric tons (MMT), registering a year-on-year rise of 7.04 percent as against to 12.30 MMT during the corresponding period of FY 2024. The data reflects varied consumption trends across dissimilar economic sectors, shaped by changes in industrial activity, power generation needs, transportation demand, and operational dynamics in public and overseas segments.
The transport sector, which remains the dominant consumer, stood a 7.99 percent rise in consumption, rising from 9.76 MMT in July-March FY 2024 to 10.54 MMT in the corresponding period of FY 2025. This growth is indicative of increased mobility, recovery in trade and logistics, and higher fuel demand from road transport and commercial vehicles. In contrast, the industrial sector saw a fall of 7.35 percent, with consumption dropping from 815.32 thousand metric tons (MT) to 755.40 thousand MT. This fall may be attributed to lower industrial output in certain energy-intensive sub-sectors or improved fuel switching towards cheaper alternatives like natural gas and renewables.
A substantial fall of 77.68 percent was registered in the power sector’s petroleum usage, which fell to just 116.21 thousand MT during July-March FY 2025. This significant drop reflects the shift toward hydropower, nuclear, coal (particularly Thar coal), and imported LNG in power generation, reducing the reliance on furnace oil-based generation. The domestic sector saw a moderate rise of 7.34 percent, while the agriculture sector’s consumption slightly fell by 3.35 percent, likely because of improved mechanization and marginally lower seasonal demand. Meanwhile, the government sector posted a modest rise of 3.27 percent in petroleum usage.
Notably, the overseas sector experienced a significant surge of 57.18 percent, increasing from 948.03 thousand MT in July-March FY 2024 to 1,490.11 thousand MT in the same period of FY2025. This sharp rise is largely driven by improved shipping activity and increased refueling demands at Pakistani ports.
During July-March FY 2025, Pakistan imported a total of 12.53 MMT of petroleum products, up from 11.14 MMT in the corresponding period of FY 2024, showing a 12.5 percent increase in quantity. However, the total import bill in value terms remained relatively stable, amounting to US$ 8.40 billion, almost unchanged from US$ 8.44 billion in July-March FY 2024. This reflects a combination of higher import volumes but lower international oil prices and improved procurement efficiency. The import of Motor Spirit (MS) increased by 11.3 percent in volume to 3.98 MMT, though the import value fell by 5.1 percent to US$ 3.04 billion, as against to US$ 3.20 billion in the same period of last year. This divergence points to a favorable shift in global prices despite rising demand from the transport sector.
A sharp surge was observed in HOBC imports, rising more than eightfold from 17.83 thousand MT to 144.44 thousand MT, with the import value increasing from US$ 16.25 million to US$ 108.40 million. This indicates rising demand for premium fuels, possibly because of an expanding high-end vehicle segment. Imports of HighSpeed Diesel (HSD) rose from 1.23 MMT to 1.45 MMT, marking a 17.4 percent increase in volume, although the value marginally fell to US$ 1.01 billion, again reflecting more favorable pricing in global markets. Imports of crude oil rose from 6.21 MMT to 6.76 MMT, recording an 8.8 percent rise in volume, while the value remained almost flat at US$ 4.11 billion, owing to softening crude prices in the global market. The increase in crude imports aligns with higher local refining activity to meet domestic demand through indigenously processed fuels. A marginal quantity of 100/LL aviation gasolinewas also imported during July-March FY2025, not recorded in the previous year. Jet fuel (JP-1) imports nearly doubled, rising from 98.24 thousand MT to 195.67 thousand MT, with the import value increasing to US$ 143.10 million, showing a strong rebound in international and domestic air travel. Presently in our country the oil industry has approached the State Bank of Pakistan (SBP) requesting for temporary approval of imports on a cost, insurance and freight (CIF) basis along with a war risk premium allowance. In a note to the SBP, the Oil Companies Advisory Council (OCAC) said that because of the rapidly evolving geopolitical situation in the Middle East, the international oil and shipping markets have become extremely volatile and freight rates, insurance costs and the availability of vessels have been severely impacted. It is also important to note that marine insurers have either withdrawn or sharply increased war risk coverage for ships operating in the Persian Gulf and the Strait of Hormuz because of the ongoing Iran-Israel-US conflict. Freight rates have reportedly been increased by almost four times, while war risk insurance premiums have surged dramatically, making tanker chartering very expensive and tough. The prevailing market situations, it said, had severely limited the willingness of shipowners, insurers and suppliers to undertake cargo movements in the region. It is said that under the current regulatory framework, the refineries and OMCs are required to import products on a cost and freight basis, under which the supplier arranges and pays for freight up to the destination port, while the buyer is responsible for arranging and bearing the cost of product insurance, including any war risk coverage. In the prevailing circumstances, the OCAC mentioned, obtaining adequate marine and war risk insurance cover has become very tough. This problem was presently reflected in a PSO spot tender floated on a C&F basis, where no bids were received for motor spirit (petrol), high-speed diesel and JP-1 cargoes. The council proposed that imports may be temporarily permitted on a CIF basis. Under CIF arrangements, the supplier is responsible for arranging freight as well as marine/product insurance (including war risk coverage) as part of the delivery of cargo to the destination port, which will enable suppliers to secure suitable insurance coverage and facilitate the movement of cargoes.