Diesel Stocks Drop Below 20-Day Supply As Companies Fear Price Cuts

Inventory levels for diesel at 12 out of 20 oil marketing companies in Pakistan have fallen below the recommended 20-day supply threshold, as firms postpone purchases due to uncertainty about potential fuel price adjustments. Severe shortages have even occurred in some instances, with stock levels plunging into single-digit numbers.

My Petroleum holds just one day of reserves, while Vital has two days, Echo possesses three days, Taj has six days, Euro has seven days, and Hascol and Horizon each have eight days. GO has nine days, Flow has ten days, Allied has eleven days, and ZMOPL and Hi-Tech each have sixteen days of stock. Eight oil marketing companies still meet or exceed the benchmark, with Wafi leading the pack at 31 days, followed by BE at 28 days, PSO at 26 days, and Parco, Gunvor, and Jinn each at 24 days.

Puma has 23 days, Attock has 22 days, and Cnergyico, formerly Byco, has 21 days. The decline in stock levels is primarily attributed to pricing uncertainty rather than a shortage of diesel in the supply chain. Companies are apprehensive that purchasing expensive stocks now may lead to losses if the government reduces HSD prices during the next pricing cycle.

The Oil Companies Advisory Council has raised this concern with the petroleum minister, urging for a more stable pricing structure for both OMCs and refineries. The issue has been exacerbated by liquidity issues and delayed price differential claims pending with the Oil and Gas Regulatory Authority. Smaller companies are especially vulnerable to blocked working capital, financing costs, and the risk of holding high-priced inventories.

Industry representatives have warned that persistently low stock levels, unsettled claims, and frequent changes in the pricing formula could further strain fuel supplies. They argue that expectations of lower prices are discouraging purchases, reducing inventories, and increasing supply chain risks.