The consequences of the ban on gasoline exports have emerged

Fuel prices will go down first, but then up

The temporary ban on the export of Russian petroleum products that came into force had an almost immediate effect: stock exchange prices for gasoline and diesel fell. The day before, the situation with fuel supply for the harvesting campaign in the agricultural regions was so difficult that the government had to take measures literally on fire. There was no time left to think.

According to the results of Friday trading at the St. Petersburg International Commodity Exchange, AI-92 gasoline fell in price by 9.63%, to 55,925 rubles per ton. The price of AI-95 gasoline decreased by 10.76%, to 59,362 per ton, and the cost of diesel fuel – by 14.52%, to 61,431 rubles per ton.

Previously, against the background of the continuous increase in wholesale and retail prices, as well as fuel shortages in a number of regions (in particular, in the Rostov, Nizhny Novgorod regions and Krasnodar Territory), cases of gas station closures due to losses have already appeared.

The situation was complicated by the fact that in the summer the volume of transportation of petroleum products by rail in Russia doubled compared to 2022.

The Russian Railways tracks were overloaded due to the need to reorient coal exports from western directions to the east and to restructure logistics chains. As a result, oil workers suffered losses because they did not receive fuel on time, and they had to stand idle without sales.

On Thursday, September 21, the government introduced a temporary restriction on the export of gasoline and diesel “to stabilize the domestic market,” as the press service of the Cabinet of Ministers reported. The measure does not apply to exports to the EAEU countries and will not affect humanitarian aid.

“The main motive is this: due to a shortage of fuel and fuels and lubricants in a number of regions, field work – the harvesting campaign and winter sowing – is under threat,” explains Nikita Maslennikov, a leading expert at the Center for Political Technologies. – Just a week ago, harvest volumes lagged behind last year’s figure by 13.2%.

The decision taken by the authorities seems to be the most compromise of all possible. The measure is clearly temporary, mainly related to fuel supply for the harvesting campaign. For oil workers, it is quite comfortable, since any of the two options that were discussed earlier (to introduce a prohibitive duty of $250 per ton or an indefinite ban on exports) would definitely lead to a loss of world market share and an increase in deficit. Price dynamics will normalize by the beginning of winter, this will also be facilitated by the fact that repair work at the refinery will be completed approximately by mid-October.”

According to a number of experts, the measure will create difficulties for commodity companies in financing oil refining. Maslennikov is not sure of this: according to him, the current world market (prices for Brent grade are stable at 93-94 per dollar) will subsequently make it possible to compensate for today’s shortfall in export profits. In general, the situation is clearly not settled. Yes, the government began to act, but where was it before? After all, the problem of fuel shortages for farmers became acute back in June.

“It is also unclear,” notes MK’s interlocutor, “what will happen to the fuel damper, how exactly the departments intend to fine-tune this vital mechanism for oil workers. All these endless adjustments and the recent halving of damper parameters have made a significant contribution to the acceleration of prices. Business responded according to market classics, raising prices for gasoline and diesel fuel to recoup potential losses from shortfalls in subsidies.”

“It is clear that under the conditions of a temporary ban on exports, it is more expedient for companies to sell products within the country. Accordingly, the risks of fuel shortages will disappear,” says Artem Deev, head of the analytical department at AMarkets. – Plus, this will allow us to quickly reduce stock quotes. So even independent gas stations will have time to replenish stocks and achieve profitability.

However, there are also disadvantages, of course. Due to the rapid oversaturation of the domestic market, refineries will reduce refining volumes. The efficiency of the entire system will decrease, which will ultimately push prices up again. I think this whole cycle could turn around in about four to six months.”