There is a widening disconnect between forecasts for domestic oil demand growth this year, with Pakistan seeing poor margins for refined fuels in the last quarter of FY2022-23.
Gross Refining Margins (GRM) of refiners dropped to a 2-year low level of $4 per barrel in April-June FY23, compared to $22 per barrel GRM in the same period last year.
The local energy sector also encountered difficulties as a result of the rupee depreciation, which reduced credit limits and caused heavy exchange losses.
Local refineries were plagued by poor furnace oil (FO) offtake by power plants, which hampered their smooth operations. FO accounts for around 25 percent of the total production mix of local refineries.
Meanwhile, the global crude and product markets exhibited a diametrically opposed pattern, with Arab Light crude oil prices falling by 3 percent while key product prices fell by 4-25 percent in US dollar terms.
Diesel and jet fuel spreads fell dramatically, indicating weaker demand for these goods.
The diesel difference declined to roughly $14 per barrel from $30 per barrel the previous quarter, while the jet fuel spread fell to around $17 per barrel from $46 per barrel.
Source: Pro Pakistani