Pakistan’s fuel oil exports drop July-August amid firmer utility demand: OCAC

Pakistan's fuel oil exports have dropped in the first two months of the fiscal year 2026-27 (July-June) due to stronger demand from the country's power generation sector, as the war in the Middle East curbed LNG availability for utilities.

Oil refineries exported 153,122 metric tons of fuel oil in July-August, down 39% year over year, the latest data from the Oil Companies Advisory Council (OCAC) showed.

There was no LSFO cargo exported in August, according to the data from Karachi-based OCAC, which compiles data on the consumption, imports and exports of domestic petroleum products.

"Fuel oil exports have declined because of higher demand from the electricity generation units, as the government's reliance on fuel oil-fired power generation has increased due to the RLNG disruptions," Muhammad Awais Ashraf, director of research at Karachi-based brokerage AKD Securities, said Sept. 29.

Just one LNG cargo arrived from Qatar under a contractual agreement in August, compared with 10 cargoes in August 2025, Awais said, adding that Pakistan typically imported eight to 10 LNG cargoes from the country every month before the war in the Middle East began.

The South Asian country has received nearly 18 LNG cargoes since March 2026, of which 11 have come from Qatar under the government contract and the remainder from the spot market, according to data from Pakistan's Oil and Gas Regulatory Authority (OGRA).

Earlier in March, Pakistan instructed domestic oil refineries to obtain prior government approval before exporting furnace oil, in an attempt to bolster reserves after the war started disrupting Middle East oil flows, Platts, part of S&P Global Energy, reported earlier.

Domestic fuel oil sales rose to about 100,000 mt in August, largely attributable to higher power demand and increased dependence on fuel oil -based power generation amid the ongoing RLNG disruptions, said Zayan Babar Khan, research analyst at Karachi-based brokerage Arif Habib Ltd.

Domestic fuel oil consumption rose to 180,000 mt in the first two months of the FY 2026-27 from 30,000 mt a year ago, according to OCAC data.

The rise in domestic sales came as electricity generation from fuel oil-fired power plants increased more than threefold year over year to 321 gigawatt-hours in August, data from the National Electric Power Regulatory Authority showed in the week from Sept. 21.

Fuel oil-fired power generation during July and August stood at 536 GWh, compared to 200 GWh in the preceding year, while electricity generation from RLNG plants slumped 36% year over year to 2,940 GWh during July-August, NEPRA data showed.

Pakistan exported 1.435 million mt of high sulfur fuel oil and 180,469 mt LSFO in FY 2025-26, compared with export volumes of 1.3 million mt HSFO and 137,880 mt LSFO in the previous financial year, according to OCAC data.

Asian market fundamentals

The Asian HSFO market continues to face supply concerns as tensions in the Middle East have capped oil flows from the Persian Gulf and recent attacks on Russian energy infrastructure have limited arrivals from the region in recent weeks, according to market sources.

Alongside relatively stable downstream bunker demand, the HSFO market is expected to draw some pockets of support from the power generation sector in South Asian countries such as Bangladesh and Sri Lanka, even after the peak summer utility demand season gets over, due to the ongoing scarcity of LNG, trade sources said.

Platts assessed the Singapore 380 CST HSFO cargo's cash differential to the Mean of Platts Singapore 380 CST HSFO assessment at a premium of $44.62/mt at the Sept. 29 Asian close, down from $46.95/mt on Sept. 28. The benchmark HSFO cash premium was still about 75% higher compared with end-August, Platts data showed.

Singapore imported about 43,875 mt of fuel oil from Pakistan in August, but there have been no arrivals from the South Asian country so far in September, according to Enterprise Singapore data compiled by Platts.