Pakistan: Oil Sector

Global oil demand is forecast to decline by 1.1 mb/d y-o-y in 2026. Global supply is set to fall by 3.9 mb/d to 102.4 mb/d in 2026 before rebounding by 8 mb/d to 110.3 mb/d in 2027. In May, output declined to 94.5 mb/d, down 600 kb/d m‑o‑m and 13.6 mb/d below pre-conflict levels. While the US‑Iran interim agreement paves the way for a rebound in Middle East exports, operational and political constraints, including prolonged demining and unresolved transit arrangements, leave downside risks to the outlook. In Pakistan, during July-March FY 2026, total consumption of petroleum products stood at 13.64 million metric tons (MMT), registering a year-on-year increase of 3.5 percent compared to 13.17 MMT during the same period of FY 2025. The data reflects varied consumption trends across different 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, recorded a 6.7 percent increase in consumption, rising from 10.55 MMT in July-March FY 2025 to 11.25 MMT (82.5 percent of total demand) in the same period of FY 2026. 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 substantial decline of 42.6 percent, with consumption dropping from 754.6 thousand metric tons (MT) to 433.5 thousand MT (3.2 percent of total demand). This decline may be attributed to improved fuel switching towards cheaper alternatives such as natural gas and renewables. A significant decline of 15 percent was recorded in the power sector’s petroleum usage, which fell to 98.7 thousand MT during July-March FY 2026. This drop reflects the shift toward hydropower, nuclear and coal (particularly Thar coal), reducing the reliance on furnace oil-based generation. The domestic sector also saw a substantial decline of 51.4 percent, while the agriculture sector’s consumption experienced a huge decline of 61.7 percent, likely due to improved mechanization and rapid adoption of solar-powered tube wells and government driven electrification projects. Meanwhile, the government sector posted a decline of 6.3 percent in petroleum usage. The overseas sector (which includes bunker sales and other exports) experienced a moderate surge of 8.9 percent, increasing from 1,490.11 thousand MT in July-March FY 2025 to 1,622 thousand MT in the corresponding period of FY 2026. This sharp rise is largely driven by enhanced shipping activity and increased refueling demands at Pakistani ports.

During July-March FY 2026, Pakistan imported a total of 13.88 million metric tons (MMT) of petroleum products, up from 12.53 MMT in the same period of FY 2025, showing a 10.8 percent increase in quantity. However, the total import bill in value terms increased to US $ 8.9 billion from US $ 8.4 billion in July-March FY 2025. This reflects a combination of higher import volumes as well as unstable international oil prices. The import of Motor Spirit (MS) increased by 2.3 percent in volume to 4.07 MMT, though the import value declined by 2.4 percent to US $ 2.96 billion, compared to US $ 3.03 billion in the corresponding period of last year. This divergence points to a favorable shift in global prices in 1st and 2nd quarters of FY 2026 despite rising demand from the transport sector. A sharp surge was observed in HOBC imports, rising from 144.44 thousand MT to 187.48 thousand MT, with the import value increasing from US $ 108.4 million to US $ 138.3 million. This indicates rising demand for premium fuels, possibly because of an expanding high-end vehicle segment. Imports of High-Speed Diesel (HSD) declined from 1,447.54 thousand MT to 1,069.80 thousand MT, marking a 26.1 percent decrease in volume. The value also significantly declined to US $ 0.74 billion, reflecting unstable pricing in global markets. Imports of crude oil rose from 6,763.12 thousand MT to 8,448.79 thousand MT, registering a 24.9 percent increase in volume, while the value increased by 21.9 percent from US $ 4.1 billion to US $ 5.0 billion, owing to increasing trend in the domestic economic activities. A marginal quantity of 100/LL aviation gasoline (0.24 thousand MT) was also imported during July- March FY 2026. Jet fuel (JP-1) import also reduced, decreasing from 195.67 thousand MT to 108.71 thousand MT, with the import value decreasing to US $ 75.8 million.