Achi news desk-
KARACHI (Newsdesk) In response to the growing surplus of fuel oil in Pakistan, Pakistan State Oil (PSO) has canceled imports of about 400,000 metric tons of diesel from the beginning of 2024.
This comes amid a significant fall in demand for diesel leading to oversupply, along with the growing challenges faced by the petroleum industry, including refineries and oil marketing companies (OMCs).
A statement issued by the PSO said diesel smuggling not only eliminates legal sales but also increases inventory levels, putting financial pressure on the industry and sustainability concerns.
The company pointed out that various factors including a delay in the agricultural season, unseasonal rain, and a reduction in industrial activity had led to a significant drop in demand for diesel, which fell by around 30% compared to the last year.
Adding to these challenges, local refineries have unexpectedly increased production, exceeding normal production levels. This increase in production has exacerbated the existing surplus problem, forcing the PSO to take strategic steps to mitigate the situation.
In response, PSO activated its long-standing partnership with Kuwait Petroleum Corporation (KPC) by reducing diesel imports. The company stressed that although these steps go beyond contractual obligations, they are necessary to address the immediate imbalance between supply and demand.
The PSO statement added that the company expects the current supply-demand gap to be short-lived based on current sales and demand patterns. However, immediate corrective action is needed to mitigate risks and prevent long-term negative consequences for all stakeholders involved.
