The dead included men, women and children.
He said numerous bodies were burned beyond recognition and will have to be identified through DNA testing.
Many bodies were burned beyond recognition and television pictures showed piles of burnt out motorbikes, apparently those of people who arrived to collect fuel or just to have a look.
"Someone should tell me about my beloved sons". When I came out of the house, I saw many people rushing towards the highway and some going there by motorcycles. "The people who were alive were in really bad shape", he said. "We turned the traffic to some other roads, and we tried to stop the crowd, but they were in hundreds and did not listen to us, so we were helpless", said Shah. A state of emergency has been declared in the city, Punjab provincial government spokesman Salman Sufi said.
The villagers rushed to the scene with containers to collect oil, according to Mohammad Akhtar, a police official with the city of Bahawalpur, who told CNN.
The explosion took place on a stretch of highway cutting through the village of Ramzan Joya.
"Suddenly the area was engulfed in flames, and most of the people were caught in those flames".More news: 34 tower blocks in United Kingdom fail fire safety tests: Government
The charred wreckage of dozens of motorcycles and cars could be seen scattered on the highway, along with kitchen utensils, pots, water coolers, jerrycans and buckets which victims had brought to collect the petrol.
"We kept on telling people to leave the crash site, but people wouldn't listen and more kept coming", said Muhammad Rizwan, a police official.
The Chief Minister of Punjab Muhammad Shehbaz Sharif has said an inquiry would be held into the incident. The district management has been shifting some of the injured to Nishat Hospital Multan.
"COAS expresses grief on losses in oil tanker incident", Director General of the Inter-Services Public Relations (ISPR) Major Gen Asif Ghafoor said in a tweet.
Rescue and operations is now under way at the scene of th incident.
The tragedy happened on the eve of Eid ul-Fitr celebrations marking the end of the holy fasting month of Ramadan in Pakistan.
A soldier stands guard at the scene of the oil tanker explosion in Bahawalpur in Pakistan.