The ongoing economic downturn and rising oil prices were major contributors to the OMCs’ weaker January sales.
The oil marketing companies’ January 2023 sales fell by 20% year over year, continuing the downward trend in petroleum consumption. Furnace oil sales for the OMCs were down, followed by high-speed diesel and motor spirit, which saw a decline in sales as well.
Between January 15 and January 23, sales of furnace oil fell by 45 percent, while sales of diesel fell by 21 percent. The consumption of motor spirits decreased by 13% from the previous year.
The ongoing economic downturn and rising oil prices were major contributors to the OMCs’ weaker January sales. With declining auto sales, extensive manufacturing, and agricultural activity, the economy is at its lowest point.
Demand has also been slowed by increased inflationary pressures and rising petroleum prices. The volumetric sales of the oil marketing segment have been significantly impacted by these factors taken together.
However, month-over-month sales did a little bit better, increasing by about 8%. The reopening of schools and a slight drop in gasoline prices, which increased sales of diesel and gasoline, were the main drivers of the increase in oil volumes in January over December.
The OCAC’s OMC data demonstrates this pattern of declining petroleum product sales by the oil marketing companies in 7MFY23 statistics as well.
During the seven months that ended on January 23, OMC sales overall fell by about 19 percent compared to the same period last year. Furnace oil, diesel, and gasoline all experienced double-digit year-over-year declines in terms of sales, falling by 27%, 23%, and 15%, respectively.
The overall decline reflects the state of the economy today. The weak economic outlook and activity have led to a decline in oil consumption. Weaker agricultural productivity, a decline in car sales, and a weaker LSM are all results of the economy’s decline.
Additionally, the 2022 floods limited activity in the areas of transportation, agriculture, and irrigation, which increased pressure on the nation’s petroleum consumption.
The country’s current high inflation wave has also been limiting the growth in offtake. The consumption of furnace oil in the power sector has also been constrained by the winter season and higher prices.
There will undoubtedly be less offtake of petroleum products in FY23. The recent price increase, additional price increases that are anticipated, ongoing political unrest, the nation’s dire economic situation, and the overall decline in aggregate demand all portend poorly for the country’s use of petroleum products.