Oil companies increased gasoline shipments to the domestic market to almost 115.6 thousand tons per day

According to Kommersant’s information, after the embargo on gasoline supplies abroad was introduced in March, oil companies increased shipments to the domestic market. At the same time, unlike the situation last fall, wholesale fuel prices did not decrease after the embargo was introduced. According to Kommersant’s interlocutors, oil companies have not yet significantly increased the supply of gasoline on the stock exchange. In addition, market participants are paying attention to the deteriorating situation with railway fuel logistics.

Over the five days of March, oil companies increased gasoline shipments to the domestic market to almost 115.6 thousand tons per day, Kommersant sources familiar with industry statistics say. Exports decreased to 0.9 thousand tons per day. The increase in shipments is due to the fact that the government, on March 1, renewed restrictions on gasoline exports, which were in effect from September to November 2023. During three months of last year, fuel shipments to the domestic market of the Russian Federation were at the level of 106–113 thousand tons per day.

Last year’s export ban brought down prices for AI-95 gasoline at St. Petersburg International Trading and Export Store by 30%. However, prices have resumed their rise this year, up 35% from early-year lows. The embargo introduced in March has not yet led to a reduction in fuel prices. Moreover, during the first days of March, AI-95 rose in price every day, decreasing only on March 7 by 1.5%, to 58.7 thousand rubles. per ton. However, so far wholesale gasoline prices are still 25% below the highs of early September 2023, when they reached 76 thousand rubles. per ton of AI-95.

According to Kommersant’s source, the cost of fuel at St. Petersburg International Trading Exchange does not show a steady decline due to the fact that oil companies “did not add goods to the exchange” against the backdrop of growing demand, and the problem with the idle time of tanks is getting worse.

Another Kommersant interlocutor claims that “now the situation is even worse than last year.” However, in his opinion, the purpose of the embargo was not a sustainable reduction, but the stabilization of exchange prices, which “for now suit both oil workers and gas stations.” In the spring, fuel prices traditionally rise against the backdrop of repairs at refineries and a simultaneous recovery in demand for fuel.

The Ministry of Energy hoped that the embargo would help saturate the domestic market with fuel. A problem may be that the railway logistics of supplies within the Russian Federation is more complicated than for export. The ministry proposed increasing the priority of transporting oil cargo by rail, but a decision has not yet been made.

Kommersant reported on March 6 that the embargo on gasoline exports would lead to logistical difficulties. This possibility exists due to the reorientation of export volumes to the domestic market. The point is that the car turnover on export routes is significantly lower than on domestic ones (17.6 days versus 21.8), that is, one domestic flight requires 4.2 days more time than an export one. Tank shortages and downtime potentially threaten to overstock the refineries in a situation where export shipments are now impossible.

At the beginning of the year, the cost of fuel actively went up due to an accident at one of the largest refineries in the country, the Nizhny Novgorod refinery, which reduced gasoline production. In the first five days of March, the production of high-octane gasoline in Russia as a whole turned out to be less than in the same period a year ago—by 0.9% (579.5 thousand tons). Concerns in the fuel market were also aggravated by the increasing frequency of drone attacks on Russian refineries.

According to Sergei Kondratyev from the Institute of Economics and Finance, the current level of shipments is quite high. In March last year, Russian refineries shipped an average of 98.3 thousand tons daily, in March 2022 – 102 thousand tons, the analyst notes. Moreover, this is higher than the average level of July 2022 (114.9 thousand tons), when a historical maximum of supplies to the domestic market was reached, adds Mr. Kondratyev. He believes that high domestic demand helps maintain balance in the market in the absence of exports.

Dmitry Kozlov