Fuel escalated by spring

The exchange price of gasoline resumed growth this week: on February 14, prices increased by 2%. This comes amid expectations that the government will reduce subsidies for refineries for the supply of gasoline to the domestic market in the spring, as well as seasonal growth in demand in the face of rising global quotations for raw materials. Kommersant’s interlocutors doubt that the rise in prices will be long-term, since the fuel surplus in the market persists. In addition, some interlocutors of Kommersant are concerned about the decline in demand for gasoline at gas stations in January.

The cost of gasoline AI-95 and AI-92 rose on February 14 by more than 2%, to 39.6 thousand and 35.8 thousand rubles. per ton, respectively, according to the data of SPIMEX. As Kommersant reported, fuel was actively cheaper in January, falling to multi-year lows against the background of the EU embargo on Russian oil products coming into force on February 5, as well as the price ceiling for them. After the outbreak of hostilities in Ukraine a year ago, which caused the imposition of EU sanctions, European traders began to refuse fuel from the Russian Federation, as a result of which, due to a surplus, its cost began to decline: current wholesale gasoline prices are about 1.5 times lower than than in February 2022.

Wholesale fuel prices are rising after the government decided to reduce the damper payments to refineries, and also on the back of oil prices rising last week.

A damper is a tool in which the budget compensates oil companies for part of the difference between the export price of fuel and the indicative domestic price, which allows reducing fuel prices in the domestic market at high oil prices. Last year, oil companies received about 2.2 trillion rubles for the damper. with a budget deficit of 3 trillion rubles.

The bill submitted to the State Duma at the end of last week reduces the value of the export price for diesel fuel and gasoline this year (see. “Kommersant” dated February 13), as a result, the budget can save more than 20 billion rubles. per month, according to Kommersant’s interlocutors. Among oil companies, Gazprom Neft, which has the highest share of its own oil refining relative to production, may experience the greatest negative effect. According to the Ministry of Finance, in total this year the budget can receive more than 600 billion rubles. from increasing the tax burden on the oil industry by adjusting the damper and changing the oil price formula used for taxation.

In addition, in March, Russia is going to cut oil production by 500,000 barrels per day, which could lead to an increase in global quotations and an export alternative for Russian oil products, pushing up fuel prices.

According to Rinat Fattakhov, vice-president of the Russian Fuel Union, the main reasons for the increase in wholesale gasoline prices are expectations of the start of scheduled repairs at refineries in March, seasonal growth in demand, as well as news about damper adjustments, which provoke market participants to increase the purchase of petroleum products for future use at low prices.

According to two interlocutors of Kommersant, there are no prerequisites for a long-term increase in fuel prices: there are enough reserves, and “gray exports have halved.” “The maximum will be a rise in price by 5 thousand rubles. per ton,” says one of them. One of Kommersant’s interlocutors in the fuel market is concerned about the decline in demand for gasoline at gas stations by 15-20% in January compared to last year, which is associated “with a decrease in business activity and incomes of the population.” This may force oil companies to start reducing prices at gas stations, since, obviously, the trend of reducing demand will continue in the long term, the Kommersant’s interlocutor believes. Until now, despite a serious decline in wholesale prices for fuel, especially for gasoline, in the last two months, prices at gas stations have not changed much. In January, according to Rosstat, there was no increase in gasoline prices at gas stations.

Dmitry Kozlov