Oil marketing firms in Pakistan eye windfall gains amid price surge
Inventory gains expected to lift profits sharply in FY26's third quarter
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
Pakistan’s oil marketing companies are expected to post strong earnings growth in the third quarter of fiscal year 2026, driven by sharp inventory gains amid rising global fuel prices, according to a report by Insight Securities.
The brokerage said recent increases in domestic prices of petrol and high-speed diesel (HSD), combined with mandatory inventory requirements, have positioned oil marketing companies (OMCs) to benefit from higher margins.
“OMCs are set to record windfall inventory gains during 3QFY26,” Insight Securities said, adding that rising product prices are likely to significantly boost profitability.
Global petroleum prices surged during the quarter due to geopolitical tensions, with petrol rising from around $72 per barrel at the end of December to approximately $138 per barrel by March this year. Diesel prices also climbed sharply, from about $79 per barrel to $234 per barrel over the same period.
Under regulatory requirements, OMCs are required to maintain inventory equivalent to roughly 20 days of sales. In a rising price environment, this enables companies to sell previously procured lower-cost inventory at higher market prices, generating substantial gains.
Insight Securities said these dynamics are expected to drive a notable expansion in gross margins, particularly for companies with higher inventory cover and efficient stock management. The brokerage estimates profitability for key players such as Pakistan State Oil and Attock Petroleum Limited to increase by about 7.3 times year-on-year and 9.1 times quarter-on-quarter.
Despite the strong earnings outlook, the sector continues to face structural challenges, particularly the buildup of Price Differential Claims (PDC). OMCs are currently carrying around PKR 107 billion in receivables from the government linked to subsidy measures.
“Delayed recoveries from the government are expected to elevate working capital requirements,” the report noted, though it added that companies are likely to manage the pressure comfortably due to strong balance sheets.
The brokerage also cautioned that higher petroleum prices could dampen retail fuel consumption as consumers adjust usage. However, it said the impact is expected to be limited, as elevated inventory gains should offset these pressures.
“Inventory gains are likely to provide a sufficient cushion to compensate for these minor setbacks,” Insight Securities said.
Looking ahead, the firm expects oil prices to remain relatively elevated in the near term, even if market conditions stabilize, citing potential supply constraints as refineries in the Gulf region undergo rebuilding and normalization phases.
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