Pakistan’s refining industry is set to gain from rising gross refining margins (GRMs) as the gap between crude oil prices and refined petroleum products widens, driven by escalating Middle East tensions that have pushed global crude, high-speed diesel (HSD), and motor spirit (MS) prices higher.
Widening Spreads Boost Refining Margins
The spread between crude oil and HSD has surged to around $55 per barrel, while the gap between crude and MS stands at about $10 per barrel. By comparison, historical averages for refining spreads typically range between $25 and $30 per barrel, highlighting the current market’s unusually favorable conditions for refiners.
Strong Refinery Throughput in February 2026
Refinery output recovered sharply in February 2026, with total volumes rising 29% year-on-year (YoY), driven by increased demand for MS, HSD, and furnace oil (FO). Key highlights include:
- HSD uplift: +43.7% YoY to 458,000 tonnes, reflecting stronger domestic consumption, reduced imports from Iran, and improved refinery utilisation.
- MS volumes: +16.9% to 223,000 tonnes, supported by robust demand and higher output.
- FO uplift: +14.3% to 162,000 tonnes, though a significant portion was likely exported at a loss due to weak domestic demand. FO sales domestically fell 16.4% YoY to 44,000 tonnes amid reduced FO-based power generation.
For the first eight months of FY26, total refinery uplift reached 7.1 million tonnes, up 12.5% YoY, with MS and HSD offtake rising 11.8% and 22.7%, respectively.
Company-Wise Performance in February
Performance varied across major refiners:
- Attock Refinery Limited: Total sales fell 5.5% YoY to 98,000 tonnes. HSD sales increased 14.3%, but MS and FO volumes declined 0.5% and 76.7%, respectively. Crude supply constraints from northern fields affected MS output, and market share slipped to 11.1% (below the historical 13.7% average).
- Pakistan Refinery Limited: Posted a 55.4% YoY sales increase to 147,000 tonnes, with growth across MS, HSD, and FO of 61.1%, 46.9%, and 67.6%, respectively.
- National Refinery Limited: Sales jumped 51.7% YoY to 113,000 tonnes, driven by MS +63.6% and HSD +77.8% after a planned turnaround last year.
- Cnergyico PK Limited: Recorded strong growth with sales up 81.8% YoY to 135,000 tonnes, led by MS, HSD, and FO increases of 79.2%, 96.1%, and 62.6%, respectively.
Oil Prices Surge Amid Rising Tensions in the Strait of Hormuz
With global petroleum prices elevated and domestic demand strengthening, Pakistan’s refining sector is strategically positioned to benefit from higher GRMs in the near term. Companies with optimized supply chains and better crude access are expected to capture the bulk of margin expansion, while refiners facing feedstock constraints may see more limited gains.
The current environment underscores how geopolitical developments in the Middle East can directly influence local refining profitability, highlighting the sector’s sensitivity to global crude and product price dynamics.
