Virus Destroying Gasoline Demand

EghtesadOnline: Gasoline consumption declined in the eighth month (July 21-August 21) of the Iranian calendar year by 30% compared to the corresponding period last year, a member of the Gasoline Station Owners' Association (GSOA) said.

News ID: ۷۵۰۸۶۲

02 September 2020

“Fuel consumption crossed 110 million liters per day in 2019 between July-August when most families travel during the summer holiday. However, the figure reached 75 ml/d this year,” Mohammad Atapour was quotes as saying by ILNA.

Despite a slight increase over the weekends, gasoline use was down in the entire month. According to Atapour, the coronavirus pandemic has hammered the gasoline sales sector by at least 30%.

Following the government’s decision to raise prices at the pumps last November (consumption then was 110 million liters per day), fuel sales declined 16% in December and reached 95 ml/d, he recalled.

The downward spiral continued and consumption declined further to 85 million liters/d in January. Sales were 75 ml/d, 65 ml/d and 50 ml/d in February, March and April, respectively, as the infectious disease peaked in and outside Iran locking up hundreds of millions people inside their homes as strict universal lockdowns came into effect.

More than 25.6 million people have been diagnosed with Covid-19 worldwide and the death toll has surpassed 850,000 while about 18 million patients recovered.

In Iran, the coronavirus outbreak started in Qom. Health officials in Tehran up until Monday confirmed 376,000 cases of infection with the novel virus, with 21,000 deaths.

“Gasoline sales never exceeded 75 ml/d in the last eight months in Iran. This is while the National Iranian Oil Refining and Distribution Company had predicted that in 2020 consumption would surpass 120 ml/d,” he recalled.

Iranians used 73 million liters of gasoline per day in 2015, which rose by 8% to reach 80 million liter/d in 2016.

Consumption climbed in 2017 when the figure reached 88 million liters/d and NIORDC statistics show that in 2018 and 2019 it exceeded 95 ml/d and 110 ml/d, respectively.

Covid Disaster

Covid-19 struck in the harshest manner possible, cutting short hundreds and thousands of lives, wiping out livelihoods and businesses and putting an end to the ascending order of fuel sales across continents.

NIORDC's daily gasoline production is 115 million liters, of which 76 million complies with Euro-4 and 5 emission standards.

Referring to the shortage of premium gasoline (which has an octane level of 91 as opposed to regular fuel whose octane number is 87) at some pumps, the GSOA chief noted that NIORDC produces enough quality fuel, but “station owners are not willing to buy it as it must be sold at unsubsidized prices (15 cents per liter)”.

Each liter of regular gasoline costs 6 cents and most motorists buy the cheaper fuel and so filling stations prefer not to order it, he noted.

According to Mehdi Mirasharfi, head of the Islamic Republic of Iran Customs Administration, gasoline export is being promoted to manage the expanding inventory -- a direct result of the pandemic-induced slump in domestic demand.

Rise in Exports

In the first five months of the current fiscal year (started March 20), more than $1 billion worth of gasoline was exported.

“Iran’s total foreign trade in the first five months was 52 million tons worth $24.6 billion, of which 38 million tons worth $10.6 billion were exports and 14 million tons worth $14 billion were imports.”

In sum, gasoline comprised 10% of the total export.

Data from consultancy FGE put Iran’s total gasoline export in March-July at 173,000 barrels per day on average, up from around 30,000 bpd in January-February. Most of the fuel is destined for neighboring Pakistan and Iraq.