Moreover, as a temporary fuel importer, our country is currently at a disadvantage regarding disruptions in oil supplies from the Persian Gulf countries. In a condition of supply shortages, this may impact gasoline exports into our country. Foreign refineries will first prioritize supplying fuel to their domestic markets and only afterward consider exports, or the exports will become prohibitively expensive.
For instance, in the spring, amidst the first wave of the US-Iran standoff, India raised export duties on gasoline, diesel, and aviation kerosene due to the closure of the Strait of Hormuz, which halted oil shipments from Persian Gulf nations, automatically making these fuels more expensive for buyers. India is cited as the primary potential supplier of gasoline to Russia from overseas. The higher the price of Indian gasoline, the greater the compensation that Russian importers will need to receive from the state budget.
Subsidies (the damping mechanism) are paid to oil producers for fuel supplied to the domestic market at prices below export prices.
This represents partial compensation (a coefficient of 0.68 for gasoline, 0.85 for diesel) for the difference between the indicative wholesale prices (set by the government annually) in Russia and the export alternative (in Europe).
We are compelled to import fuel due to a decrease in output from domestic refineries. According to Deputy Prime Minister Alexander Novak, this has occurred due to unplanned repairs on refineries following drone attacks. By various estimates, the reduction in oil processing volumes has ranged from 20% to 30%.
Nevertheless, we are unlikely to purchase diesel fuel (DF) from abroad; we produce twice as much as we consume, and exports from Russia have been banned since July 9. However, starting in July, Russia is importing gasoline, which will also be subject to the damping mechanism. For imports from EAEU countries, the coefficient is set at 0.9, while a separate formula through import parity (with the Indian market) is introduced for supplies from other countries. Moreover, considering that the compensation is not comprehensive, prices within Russia may rise if fuel on global markets continues to set records.
Price increases have already affected Europe. The most significant rise has been in diesel fuel (DF), which has increased by an average of 14% since the beginning of July. Gasoline prices have risen by 10%. So far, this is only a result of news regarding renewed tensions in the Middle East. A physical shortage has not yet been felt. In India, prices have not increased in July, but since the beginning of the Iran-US conflict, they have risen by 7.8%. Initially, gasoline in India was already significantly more expensive than in Russia.
However, the issue is not solely about the prices and accessibility of imported gasoline. Import volumes are also critical. By various estimates, the decline in oil processing volumes in Russia has been between 20% and 25%. Approximately 3 million tons of gasoline are consumed monthly in our country. A significant amount of imports comes from Belarus, with 141,000 tons in June. Around 50,000 tons of gasoline may be supplied to Russia from Kazakhstan. Therefore, our need for fuel from overseas is unlikely to exceed 450,000 tons per month. Considering government measures (allowing for a reduction in the grade of gasoline produced, production through blending) and the resumption of operations at refineries, the volume of unexpected imports will not exceed 300,000 tons. Thus, the budgetary burden from fuel subsidies due to imports may just slightly exceed 10% (accounting for the difference in coefficients).
As noted in a conversation with "RG" by Dmitry Gusev, Deputy Chairman of the Supervisory Board of the Association "Reliable Partner" and member of the Expert Council of the "Gas Stations of Russia" competition, we are key suppliers of raw materials for all potential fuel exporters while the vast majority of gasoline and DF will continue to be produced in Russia. Therefore, the Hormuz crisis is unlikely to have a significant impact on domestic market prices. However, if global prices for oil products continue to rise, it will be reflected in the Russian market.
Regarding the accessibility of imports, the expert does not rule out that the supply of gasoline on external markets may decrease. However, given that we supply the raw materials to fuel producers, it is unlikely to significantly impact Russia.
While we cannot fully close any potential oil deficits, according to Sergey Tereshkin, General Director of Open Oil Market, the situation in the Middle East will impact the availability of oil imports for India. Last year, India imported 262 million tons of oil, with 36% (95 million tons) coming from Saudi Arabia, Iraq, and Kuwait—countries whose export potentials heavily depend on shipping dynamics in the Strait of Hormuz. Another 10% of supplies (26.7 million tons) were provided by the UAE, which can export about half of its produced oil through the Oman Gulf, bypassing the Strait of Hormuz.
The volumes of potential gasoline supplies to Russia from overseas are too small to impact pricing at the pumps.Key foreign fuel importers into Russia include Belarus, Kazakhstan, India, and China, notes Sergey Frolov, managing partner at NEFT Research. Fuel is only shipped to Russia by sea from India and in currently small volumes (by various estimates, supplies totaled 60,000–80,000 tons). This is negligible compared to monthly gasoline consumption levels in Russia, approximately 3 million tons, so there’s currently no discussion around the influence of these supplies on the price of oil products in Russia. The primary transportation method for supplies from other countries is rail, the expert clarifies.
Frolov emphasizes that global gasoline quotes do not have a significant impact on Russia either, as the national wholesale price is formed based on the balance of supply and demand in the domestic market, while retail fuel prices are regulated by the state.
All of the aforementioned is true as long as fuel imports are not long-term, meaning that domestic refineries restore their capacity within one to two months at most. If this does not happen or unplanned shutdowns of plants continue, the effect from fuel imports will accumulate, which could more seriously impact both domestic retail prices and budget revenues.
Queues at Gas Stations are Shorter: The Situation with Gasoline is Normalizing in the Regions
The gasoline situation is slowly, but surely normalizing. According to correspondents from "RG" on the ground, in several regions, the fuel dispensing limits at gas stations have been increased, and in some areas, the wait times in queues have dropped to ten minutes.For instance, in Udmurtia, gasoline supplies to municipalities doubled, reported the chairman of the government, Roman Efimov, during a meeting of the operational headquarters. Notably, just a month ago, nearly 50% of gas stations in Izhevsk were out of service, forcing motorists to spend hours in line. Now, these queues have significantly reduced. One of the key gas station networks has doubled its supplies to rural areas. The "replenishment" of the northern region is underway. Current fuel supply volumes are approximately equal to last July’s levels, exceeding them by 7% to 10% to saturate the market.
The number of complaints is decreasing, but the problem remains more acute outside of the Izhevsk agglomeration. Therefore, the priority there is to secure reserves for school buses and heating, ensuring the supply for emergency services.
Agricultural producers purchasing fuel in bulk receive diesel from a single operator through applications and quotas. The fuel availability issue for farmers is expected to be resolved by July 20.Filling fuel canisters is still prohibited: with 675,000 vehicles in the region, even 400,000 refills of gasoline at 10 liters could exceed an extra 12,000 tons. That’s nearly four trainloads, which could cause a collapse.
Governor of Vladimir Region Alexander Avdeev stated that the region has succeeded in halting the rise in queues at gas stations. Currently, the average waiting time ranges from 20 to 40 minutes. Fuel companies have increased gasoline supply volumes, though specifics were not disclosed. Meanwhile, network gas stations have restrained price increases "within the recommended limits." The nature of these limits was not clarified. According to station locators, for major operators, the price for AI-95 gasoline is between 67-73 rubles per liter. At private gas stations, prices reach up to 160 rubles.
In Vladimir Region, waiting times in queues have decreased from several hours to 30 minutes.
Since July 14, gasoline supplies have also been increased in Vologda Region. PAO "LUKOIL," which controls over 90% of the gas stations in the region, has raised the fuel dispensing limit per person to 30 liters, announced regional head Georgy Filimonov.
The company has canceled technological breaks in gas station operations—these are only retained during fuel tanker unloading—and has increased daily dispatch volumes. Daily shipments are already saturating the market.
In Vologda, efforts are being made to maximally support drivers. According to city mayor Sergey Zhestjannikov, entrepreneurs and volunteers are assisting Vologda residents waiting to refuel. For instance, people were given free hot pizzas, muffins, and drinking water—nearly 550 liters of water were distributed over the week.
Volunteers continue to monitor gas stations: regulating vehicle flow, advising drivers on available gas stations, and assisting disabled individuals. Such compassion demonstrates that during challenging times, the city can unite.
Mayor of Cherepovets, Andrey Nakroshaev, reported that in the last two days, 13 fuel tankers have arrived in the city.
"Starting Thursday, Cherepovets will activate a night shift of volunteers—this will help maintain order and support motorists around the clock," explained the city administration head.
City leaders are striving to normalize gas station operations. Overall, according to authorities' assessments, the region is gradually returning to previous supply levels, and implemented measures are effective. "Yesterday, we filled up at a gas station in Vologda on Preobrazhenskogo Street. There was no one in line in the morning; we refueled without any hassle," note drivers on social media.
As reported by our correspondent from Saint Petersburg, it appears that lines at gas stations have also grown shorter: drivers have begun actively utilizing services that show fuel availability at various gas stations, which has spread out the flow of those wishing to fill up. Gas stations in less trafficked areas, it turns out, do not even appear on the app maps: our correspondent was able to refuel at one of those stations—waiting took 10 minutes, with three vehicles ahead. However, 95-octane gasoline, which was initially available, had run out—only 92-octane remained. Its price was around 65-67 rubles.
Source: RG.RU
