A temporary ban on the export of aviation kerosene has been introduced in Russia, effective from 1 June to 30 November of this year. The decision, outlined in a government decree, aims to ensure stability in the domestic fuel market.
The prohibition covers fuel, including that acquired through exchange trading. Exceptions apply to consignments placed under customs procedures prior to the decree taking effect, deliveries under intergovernmental agreements, and fuel contained in technological tanks used by aircraft en route.
The decision was made against the backdrop of a sharp rise in aviation fuel prices. At its peak on 25 May, quotations on the St. Petersburg Exchange reached an all-time high of 96,960 roubles per tonne. Since the beginning of April, prices have risen by nearly 25%. Meanwhile, no reports of a jet fuel shortage have emerged.
As noted by Sergey Tereshkin, CEO of Open Oil Market, in an interview with "RG", aviation kerosene prices on the Russian market are not heavily dependent on crude oil prices. Similar to petrol and diesel, the final consumer price comprises extraction and refining costs, transportation expenses for petroleum products, and the margin of the sales segment, including the profits of companies supplying aviation fuel to air carriers.
Nevertheless, the sharp surge in global barrel quotations driven by the conflict in the Middle East undoubtedly pushed Russian market prices higher. Additionally, reports of unscheduled shutdowns at several domestic refineries may have acted as a trigger.
Aviation fuel production in Russia is sufficient to meet both domestic market demand and export obligations. The country produces approximately 11 million tonnes of aviation kerosene annually, of which 15% to 20% was previously exported, primarily to Central Asian countries.
Tereshkin believes the ban on aviation kerosene exports is intended to caution oil companies against further price increases. Some stabilisation may occur now, but a return to normal levels will only happen once transit through the Strait of Hormuz resumes. The prevailing information climate provides oil companies with opportunities to maintain high aviation fuel prices.
It is also worth noting that a damping mechanism is in place for aviation kerosene in Russia. This is analogous to the damping mechanism for vehicle fuel, but with one significant difference: it is paid not to fuel producers but to carriers—namely, airlines. The state reimburses 65% of the difference between the export price of aviation kerosene and the fixed domestic market price set by the government.
No directives regarding damping payments are contained in the government decree. This means airlines will continue to receive them, which should help curb rising ticket prices, as fuel accounts for 25% to 35% of these costs.
Source: RG.RU
