Russian authorities are trying to stabilize gasoline prices with verbal interventions

According to Kommersant’s information, oil companies increased the supply of gasoline to the domestic market in June in the context of the completion of repairs at refineries, but they are still 6.5% less year-on-year. The continuous rise in wholesale gasoline prices this year is prompting regulators to intervene verbally and threaten oil companies with antitrust cases. In addition, the government has tightened fuel export rules to reduce gray exports. So far, we have managed to stabilize prices on the stock exchange, but the growth of export netback casts doubt on this result.

Oil companies delivered 2.8 million tons of gasoline to the domestic market in June, which is 6.5% less than in the same period last year, Kommersant’s interlocutors, familiar with the data for 27 days of the month, said. On a daily average basis, oil companies increased gasoline production in June by 6.6% compared to May, as refineries gradually restore processing after preventive maintenance.

At the same time, the initial plans of oil companies for fuel shipments in June amounted to more than 3 million tons of gasoline, but in practice, shipments lagged behind the plan by almost 7% and by about the same amount from June 2022.

Gasoline production also lags behind last year’s figures. Thus, oil companies produced a little more than 3 million tons of fuel, which is almost 4% less than last June, while exports soared by almost 62%, to 223 thousand tons. At the same time, relative to May, the average daily value of exports decreased by almost 30%.

Against the backdrop of continuously rising wholesale prices for gasoline in recent months, fuel market regulators have required oil companies to increase production and sales at SPIMEX. Market participants claim that one of the reasons for the increase in prices is the lack of fuel supply.

However, the Ministry of Energy does not agree: “Demand in the domestic market is fully supported by supply.” Oil companies are complying with the recommendations of the headquarters of the Ministry of Energy to increase shipments to the domestic market by reducing exports, the ministry added.

The growth of wholesale prices in the spring-summer season is a typical situation, since simultaneously with the departure of factories for repairs, the demand for fuel also increases. This year, the cost of fuel has been continuously growing since March, having first overcome the pre-sanction values, and then completely setting new historical highs. According to Kommersant’s interlocutors in the oil industry, companies began to noticeably increase exports from the fourth quarter of last year due to an increase in its profitability against the backdrop of a weakening ruble. Now export netbacks also exceed the price of fuel within the Russian Federation and continue to grow.

At the same time, the government has been discussing since April the reduction of damper subsidies for oil companies for fuel supplies to the domestic market, which may cause a decrease in refining volumes. Such expectations caused even more excitement in the market.

In June, the FAS threatened oil companies with antimonopoly cases if they did not increase the supply of fuel on the stock exchange. In addition, the government has tightened measures to prevent gray fuel exports – shipments abroad of volumes for which oil companies have already received damper payments. The FAS also announced plans to increase the obligation to sell gasoline on the stock exchange from 12% to 13% of production. As a result of verbal interventions, the cost of fuel on the exchange decreased, but each time not for long.

So, on June 29, the cost of AI-95 and AI-92 decreased by 0.34% and 0.72%, to 64.8 thousand and 58.3 thousand rubles. per ton, respectively. However, during the reporting week, according to Rosstat, the growth of retail prices accelerated. The average fuel price increased by 0.43%, to almost 52.2 rubles. for 1 liter At the same time, fuel prices at filling stations have already increased by 2.4% since the beginning of the year, with inflation of 2.77%. The plans of regulators to contain the annual price growth within the limits of inflation.

Dmitry Kozlov