Since the end of May, authorities in various Russian regions have begun to restrict fuel sales at gas stations. Citizens are reporting shortages of gasoline and diesel, long queues, and rising prices. By the end of last week, the petrol shortage had reached Moscow, where drivers also formed lines at filling stations. As of June 23, varying restrictions on fuel sales have affected 61 regions. Forbes investigated whether this situation constitutes a true fuel crisis or if these are merely temporary difficulties, if it will impact Moscow, and from where Russia should ideally import gasoline under conditions of shortages – from China, India, or Belarus. As of the morning of June 22, according to information from the agency "RZD-Partner.RU," fuel sales regulations had been introduced in 53 out of 89 regions in Russia. Later that evening, officials from Saratov, Omsk, Voronezh, and Irkutsk regions announced similar restrictions. On June 23, during a meeting between President Vladimir Putin and government members, Deputy Prime Minister Alexander Novak stated that the current situation in the fuel market is "indeed complicated, but manageable." "What has been done to date? Firstly, a complete ban on the export of gasoline and aviation kerosene has been introduced, and we are currently considering a total ban on the export of diesel fuel," Novak revealed. Farmers have requested a ban on diesel exports, arguing that it would primarily help secure the internal market and agricultural producers. On May 20, Reuters reported that nearly all major oil refineries in central Russia, which account for approximately a quarter of the country's refining capacity, halted or reduced production due to drone strikes. At that time, authorities claimed that the domestic motor fuel market remained stable and that the industry was prepared for a seasonal increase in demand. By June 23, the number of regions reporting restrictions had risen to 61, meaning that purchasing gasoline had become difficult in two-thirds of the country's territory. ### Chronicles of Restrictions The first to restrict fuel sales was Crimea. On May 30, the head of the administration of the peninsula, Sergey Aksyonov, announced that from May 31, gasoline AI-95 would be sold exclusively through vouchers, and sales of AI-92 would be limited to 20 liters per vehicle. On May 31, Sevastopol Governor Mikhail Razvozhayev announced the introduction of a system for selling gasoline by vouchers and implementing sales limits. On June 8, the Ministry of Energy acknowledged that a number of southern regions were facing temporary supply difficulties due to an increase in drone attacks. To ensure stable and efficient operation across the country's fuel and energy sector, the ministry established a coordination sectoral headquarters involving major oil companies, which has since held several meetings. On June 10, 15 gas stations in the Krasnodar region suspended fuel sales due to heightened demand, as reported by the regional operational headquarters citing the Ministry of Energy and Housing Utilities. On June 13, the head of Tatarstan, Rustam Minnikhanov, reported about the imposition of temporary limits at several gas stations in the republic following a recent drone attack in Nizhnekamsk, where two major oil refining facilities are located — the Taneko refinery owned by Tatneft and the TAIF-NK refinery. On June 17, Tatneft lifted the imposed restrictions at its gas stations. The number of news reports was growing exponentially. On June 15, Governor Vyacheslav Fedorishchev announced limited fuel sales at certain gas stations in the Samara region. On June 17, the Ministry of Energy, Industry and Communications of the Stavropol Territory indicated that several gas stations in the region had limited gasoline sales to 100 liters per vehicle. On June 21, Aksyonov announced the complete cessation of gasoline sales at gas stations in Crimea to individuals and legal entities, except for state services. On June 22, during another meeting of the coordination headquarters, Deputy Prime Minister Alexander Novak instructed relevant agencies to prepare an action plan to maintain stability in the fuel market, while the Federal Anti-Monopoly Service (FAS) was to continue monitoring the pricing situation in the sector and take timely measures as necessary. On the same day, the FAS reported its actions against speculators. The marketplaces, where fuel was already restricted from sale, blocked attempts to resell gasoline. "There was and is no gasoline on our shop window. Creating a card is impossible; it will be blocked at the moderation stage," said a representative of Ozon. A representative from RWB reported the same impossibility of selling fuel on Wildberries. The FAS conducted unscheduled inspections of large oil traders to determine if there was any collusion in exchange trading and initiated a case regarding violations of competition protection laws against three of them. The agency instructed territorial bodies to intensify price controls during the sale of fuel to agricultural producers. On June 23, the Neftmagistral gas station network announced a reduction in gasoline prices following FAS inspections. On social media, the company stated that it updated the price of all types of fuel, decreasing it by 15 rubles. AI-95 is now priced at 79.99 rubles per liter, AI-92 at 70.99 rubles, and diesel at 84.99 rubles. By the morning of June 23, at least four more governors announced limitations on fuel sales. By this date, varying restrictions on gasoline and diesel sales had been introduced in 61 regions of Russia out of 89. Local authorities claim that these measures are aimed at reducing unjustified public enthusiasm and potential speculation in the fuel market. ### Price Growth Indirect evidence of shortages is evident in the discrepancy between the rise in fuel prices on exchanges and at gas stations, drawing the attention of the FAS — wholesale prices are rising more sharply. Prices for AI-92 gasoline on the St. Petersburg exchange rose by 3.6% from June 1 to June 23, from 68,200 to 70,638 rubles per ton, while AI-95 prices increased by 3.7%, from 75,459 to 78,241 rubles per ton. On January 12, the first day of trading on the exchange this year, AI-92 was priced at 56,673 rubles per ton, which is 29% less than on June 23; AI-95 rose by 33% from 59,003 rubles per ton. Diesel prices saw the most significant hike, climbing 9.2% from 67,467 rubles per ton on June 1 to 73,689 rubles on June 23, and by 37% since the start of the year from 53,914 rubles per ton. According to the latest published data from Rosstat, average prices for automotive gasoline at gas stations across Russia increased by 2% from June 1 to June 15, reaching 65.41 rubles per liter for AI-92 and 71.11 rubles for AI-95. Since the beginning of the year, the growth for both types of gasoline was 6.6%. Diesel fuel rose by 1.8% over the two weeks of June and by 5.7% since the beginning of the year, reaching 80.78 rubles per liter. As of June 23, prices at gas stations have already exceeded these averages: at Moscow's Lukoil gas stations, AI-95 was priced between 72.39 and 73.87 rubles per liter, with AI-92 starting at 65 rubles per liter and diesel at 78.88 rubles per liter. At Rosneft, AI-95 prices began at 71.15 rubles, AI-92 ranged from 62.8 to 65.09 rubles, and diesel cost 79.35 rubles per liter. In addition to reduced fuel output due to unscheduled repairs at refineries, prices are influenced by growing price expectations: consumers are uncertain about the availability of gasoline and diesel in the coming weeks and months, which accelerates price increases irrespective of actual production conditions, says Sergey Tereshkin, CEO of the fuel marketplace Open Oil Market. ### A Real Crisis? Local shortages do exist, but with the exception of the country's southern regions, they are largely driven by panic buying rather than supply interruptions, says Maxim Shevyrenkov, head of the raw material analysis center at the Institute for Energy and Finance (IEF). The current quotas at certain gas stations are often reasonable and intended to temper excessive demand, according to the expert. "If a lot of drivers arrive at a single gas station wanting a full tank all at once, they will naturally drain its storage, and there will be no gasoline left," he explains. "Consumers will then move to neighboring stations, creating excess demand there, which can ultimately lead to local shortages." It is too early to declare a comprehensive fuel crisis across Russia, says analyst Vladimir Chernov from Freedom Global. However, he agrees that localized issues exist and in some cases are serious. The regions most affected at present are Crimea, Sevastopol, the south, and specific areas of the Volga region and Central Russia. If attacks on oil refineries continue, deficits in regions with complex logistics could worsen. However, if the damaged facilities are restored quickly and supplies from other regions, Belarus, and Asia help fill the gaps, the market could gradually stabilize. Nonetheless, a rapid rollback in prices should not be expected. "There will be no grounds to claim that life will come to a standstill anywhere, or that transportation will cease," asserts Stanislav Mitrahovich, an expert at the Financial University and the National Energy Security Fund. He suggests that some regions, in addition to increasing external supplies, might have to find solutions through raising fuel prices and consequently reducing demand. "In areas where drone attacks are particularly active, it may be necessary to implement rationing, which is typical during periods of military actions, disasters, and other extraordinary situations," Mitrahovich remarks. ### Moscow Without Restrictions Attacks on the Moscow refinery, according to local authorities, have had no impact on the city's fuel supply. Following a recent attack on June 18, the capital’s urban management complex reported that the supply of petroleum products to Moscow and the operation of all gas stations in the city were occurring as usual. However, queues and restrictions on the number of liters dispensed are still present in Moscow and the surrounding region, as verified by Forbes correspondents. For example, at the Lukoil gas station on Bolshaya Cheryomushkinskaya street, customers cannot purchase more than 30 liters, while at gas station 1116 of the ORTK network in the Moscow region, the limit is set at 20 liters. The situation was worse at the end of last week when fuel prices were higher, and to fill up with diesel, a Forbes correspondent had to wait in line with 17 vehicles. Some were only able to find fuel after visiting the third gas station on their list. The Moscow refinery meets a significant portion of the region's demand for gasoline, diesel, aviation kerosene, and bitumen, notes Chernov from Freedom Global. Therefore, issues at this facility are not just isolated incidents but signify a blow to one of the primary sources of fuel for Moscow, he states. According to the refinery owner, Gazprom Neft, the Moscow refinery supplies over one-third of the capital region's fuel market. Nevertheless, the situation in Moscow does not currently appear critical: major networks are operational, fuel is generally available, and local authorities and oil companies will prioritize supply to the capital region, Chernov believes. He states that some supplies to the city could be redirected from other refineries: Yaroslavl's (Slavneft-YANOS), Nizhny Novgorod refinery (Lukoil-Nizhny Novgorodnefteorgsintez), Kirisha refinery (Kinef), as well as facilities in Tatarstan and the Volga region. "It's not just about having fuel available; it also needs to be transported: tankers, oil depots, adjustments to railway schedules, and availability at the refineries are all necessary. Therefore, substitution is possible, but not instantaneous." Moscow is likely to navigate the current crisis without experiencing a full-blown fuel crisis, as it will be prioritized for supplies, believes Chernov. However, prices are expected to remain high, and local shortages at certain gas stations remain a possibility. At this stage, specific fuel shortages are not anticipated for the capital region, agrees Shevyrenkov from the IEF. The Moscow region can receive fuel from at least two refineries, aside from the Moscow one — RNPK and Slavneft-YANOS. There is potential for fuel supply from underloaded capacities of Belarusian refineries. Although gasoline from Belarus will certainly be more expensive, it is unlikely that there will be a complete lack of fuel at gas stations, states Shevyrenkov. "Currently, from available sources, it can be concluded that the damage to the Moscow refinery is not very severe," notes Shevyrenkov. "Several fuel storage tanks were burned, and apparently the combined primary processing unit was damaged. Fuel production at the plant will decrease, but practice indicates that repairs to such equipment typically take from two weeks to a month. Therefore, barring further accidents, the refinery may well start shipping fuel as early as July." ### Where to Source Fuel? According to Reuters, drone attacks have forced Russia to begin importing gasoline by sea, and unnamed sources reported to the agency that the first batch of fuel from an Asian country could arrive as early as June. Reports of possible gasoline imports from Asia appear plausible, although it is a peculiar situation for Russia— a significant exporter of oil and petroleum products, remarks Chernov from Freedom Global. "If there are fuel shortages in certain regions, a one-time purchase from abroad becomes a reasonable solution," he asserts. Theoretically, gasoline could come from India, where Rosneft holds a stake in the Vadinar refinery, but since the official supplier and import volumes have not been disclosed, asserting it as a fact is not possible, says Chernov. The most likely supply source is China, which in recent years has been one of the leaders not only in introducing new refinery capacities but also in the adoption of electric vehicles, Chernov notes. More than half of new passenger car sales in China are already accounted for by electric vehicles and plug-in hybrids, which means demand for gasoline should gradually decline, he reminds. Belarusian gasoline supplies could increase from the current 60,000 tons per month to 200,000 tons and more—more than enough to stabilize the Russian market, believes Shevyrenkov from the IEF. According to him, supplies from Asia are likely more of a means to pacify the market—fuel there is expensive and its transportation to Russia is not very commercially viable. Chernov agrees. "Imports from Asia will not resolve the problem on a systemic level," he states. "Transporting gasoline by sea is lengthy and costly and will require internal distribution within the country. This is more of an emergency measure to fill a gap in the market rather than a new supply scheme." Source: Forbes