Some 140 more people were wounded, including 40 in critical condition, said Mohammad Baqar, an official with local rescue services, adding that the toll was expected to rise.
The tanker overturned after trying to make a sharp turn on a national highway on the outskirts of the city of Bahawalpur.
It was driving from the southern port city of Karachi to Lahore, the Punjab provincial capital, when the driver lost control and crashed.
“People of the area and passersby had started gathering fuel when the tanker exploded, burning everybody on and around the spot,” provincial government spokesman Malik Muhammad Ahmed Khan told Reuters.
Serious burn victims, several in critical condition, were airlifted by helicopter to hospitals in Bahawalpur and nearby cities for treatment.
Witnesses said about 30 motorcycles that had carried villagers to the accident site lay in charred ruins nearby. Eight other vehicles were destroyed, they added.
“According to the initial reports, somebody tried to light a cigarette, and the spilt fuel caught fire, leading to the tanker’s explosion,” said Jam Sajjad Hussain, a spokesperson for the rescue workers service .
Residents were told of the leaking fuel over a loudspeaker on top of the local mosque, said Rana Mohammad Salim, deputy commissioner of Bahawalpur.
Mr Salim said some of the seriously injured have been moved to Multan. The dead included men, women and children, he said.
Many of the bodies were burned beyond recognition, said Rizwan Naseer, head of Punjab province’s rescue services.
The death toll is likely to rise, he added.
Imran Shah, a spokesperson for the highway police, told a local TV channel police moved quickly to redirect traffic but could not stop the scores of villagers who raced to collect the fuel.
Firefighters fought the flames for over two hours before extinguishing the fire.
Army helicopters were dispatched to transport casualties to hospitals, army spokesman Major General Asif Ghafoor said in a tweet.
The disaster came on the eve of the Muslim holiday of Eid al-Fitr, which marks the end of the fasting month of Ramadan.
While Saudi Arabia and most other Muslim countries celebrated the holiday on Sunday, Pakistanis will celebrate on Monday.
Pakistan’s Prime Minister, Nawaz Sharif, “expressed deep grief over the heavy loss of life”, his office said in a statement.
“The Prime Minister has directed provincial government to provide full medical assistance to the injured with burns,” it added. “The Prime Minister has expressed sympathies with the bereaved families and prayed for the departed souls.”
The Chief Minister (CM) of Punjab said an inquiry would be held.
“CM Punjab Muhammad Shehbaz Sharif has expressed a deep sense of sorrow and grief over the loss of precious human lives in the tragic incident of the oil tanker near Ahmad Pur Sharqiyya Bahawalpur.
“CM expressed sympathy and condolences with the bereaved families and directed the administration to provide best medical facilities to the injured persons. CM also sought report of the incident and ordered to hold an inquiry of the incident,” a statement said.
Imran Khan, the chairman of the Pakistan Tahreek-e-Insaf party, said the blaze was “a national tragedy of epic proportions”.
The former cricketer said he had asked the local leadership in the area to immediately assess what assistance can be provided to the injured and to the families of the victims.
The US Embassy in Islamabad tweeted their “deep condolences to the families and loved ones of the victims”.
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