The Ministry of Energy emphasizes that the priority remains to fully satisfy domestic fuel needs, including agricultural producers during seasonal field work. The possibility of export will be determined based on the evolving fuel balance, production volumes, inventory levels, and the dynamics of domestic demand.
In August, there were no reported issues with the availability of diesel fuel at service stations (SSS). Difficulties were primarily noted with gasoline, particularly the AI-95 grade. According to the same Ministry of Energy, the situation regarding the supply of diesel fuel to the domestic market is currently stable. Following the export restrictions, additional supplies were redirected to the internal market.
140,000 tons of diesel fuel are consumed daily in Russia during peak demand periods - in spring and autumn.Russia has historically produced significantly more diesel than gasoline - approximately twice as much, sending a considerable portion for export. For instance, in 2023, total shipments of diesel fuel from Russian refineries reached 87.9 million tons, with 52.2 million tons allocated to the domestic market and 35.7 million tons exported, as reported by Sergei Tereshkin, the CEO of Open Oil Market. In his view, a surplus likely remains even now, despite unplanned repairs at the refineries.
This raises the question: why extend the ban then? According to Dmitry Prokofyev, Director of External Communications at NEFT Research, maintaining the ban on diesel exports guarantees the physical availability of fuel in the domestic market during peak seasonal demand. It is no coincidence that the Russian Fuel Union (RTS) insisted on preserving limitations in a letter to Deputy Prime Minister Alexander Novak on August 24, warning that lifting the embargo on September 1 could destabilize the already fragile balance of supply and demand within the country. Ahead lies the traditional autumn surge in demand, transitioning to the production and formation of winter-grade diesel stocks. Opening up export under these conditions presents unreasonably high risks of worsening the situation, Prokofyev argues.
There is also the issue of prices. As of August 17, according to Rosstat, with inflation at 4.67%, retail diesel prices have increased by 18.4% since the beginning of the year. In recent weeks, prices for diesel fuel have decreased, but with autumn approaching, demand is expected to rise, raising the risk of further price increases for diesel. Extending the ban minimizes this risk.
Dmitry Gusev, Vice Chairman of the Supervisory Board of the "Reliable Partner" Association and a member of the Expert Council of the "Gas Station Russia" competition, believes that the ban not only ensures a steady supply to the domestic market, but also reduces the global supply of diesel fuel, which is tactically advantageous for us. This has led to rising prices at service stations, for example, in Europe. There, they feel the effects of UAV attacks on our refineries in terms of their financial impact, the expert explains.
Extending the diesel export ban will help curb price growth at service stations.It should be noted that the global increase in diesel fuel prices, albeit indirectly, contributes to rising prices in Russia. At least until diesel is produced in Russia not just for the domestic market. Additionally, the rise in global diesel prices increases budget compensation payouts from the Russian Federation to domestic refineries and fuel importers for their supplies at prices lower than those in foreign markets.
As for the duration of the extension, experts have differing opinions. Gusev believes that the ban will likely be extended until November 1 or even longer. To prevent market saturation, excess volumes of diesel fuel could be purchased by the government to create a strategic reserve that could later be utilized for both the domestic market and exports.
Tereshkin, on the other hand, thinks that if the ban is extended, it will likely not be for more than one month. Diesel exports are one of the important sources of revenue for refineries, which are currently incurring costs due to partial outages of capacity. Moreover, an excessively long ban poses the risk of reducing oil production.
Prokofyev agrees that there exists a risk of decreased oil production. This is directly linked to the capacity utilization of refineries. If they cannot export diesel, their incentives to maintain high capacity utilization diminish. A reduction in refining leads to lower demand for oil, and consequently, a decrease in production. However, the expert suggests that the most likely scenario is an extension of the export embargo for 1-3 months. A short-term extension should not cause significant harm to refineries. Current stock levels and domestic demand can absorb the existing production volumes. A medium-term extension (until the end of 2026) is a more risky scenario. If production begins to recover while exports remain closed, refineries may face the necessity of reducing their output, the expert emphasizes.
Source: RG.RU
