The Russian government has temporarily banned the export of commercial gasoline and diesel fuel since September 21

After several months of inaction, the government took radical measures to stabilize prices for petroleum products – from September 21, it temporarily banned the export of commercial gasoline and diesel fuel. The timing of the lifting of the ban is unclear, but market participants note that the embargo is unlikely to last more than a month. Otherwise, refineries will be forced to reduce processing due to overstocking with diesel fuel. During this time, the government and oil companies will have to come to an agreement on a new mechanism for stabilizing the fuel market, which, apparently, will include a high export duty.

Prime Minister Mikhail Mishustin signed resolution government, which imposes a temporary ban on the export of gasoline and diesel fuel from Russia. The document came into force on September 21, but the government did not disclose the terms of its validity.

The ban should help stabilize the situation on the domestic market for petroleum products, prices for which have repeatedly reached historical highs this summer. As the Ministry of Energy explained, “the restrictions will make it possible to stop the gray export of motor fuels and saturate the domestic market.” After their introduction, the ministry expects an increase in the supply of petroleum products on the domestic market.

At the same time, the export of commercial fuel to Abkhazia and South Ossetia, the countries of the Eurasian Economic Union (EAEU), and also within the framework of intergovernmental agreements is allowed.

Also, the restrictions will not affect humanitarian aid, transit, provision of military units abroad and fuel for personal use of citizens.

The government decided to resort to an export ban after it became clear that it would take time to agree on and introduce a protective export duty on fuel. This requires amendments to the law on customs tariffs and, possibly, also to the Tax Code, and therefore it will not be able to earn money from October.

The export ban applies only to commercial gasoline and diesel fuel and will not apply to straight-run gasoline, as well as heavy distillates and products with a sulfur content higher than 0.05%. Thus, simple refineries will be able to continue exporting, and complex refineries may increase the production of non-commercial products, including sulfur diesel fuel (prohibited for circulation in the Russian Federation), as well as kerosene and fuel oil, which are not subject to restrictions.

However, if the ban lasts longer than a few weeks, large refineries face the risk of overstocking with diesel fuel and reducing refining.

Considering that oil exports from Russia are also limited as part of mutual obligations with Saudi Arabia, a reduction in refining will inevitably lead to the need to reduce oil production.

Against the backdrop of the decisions made, the cost of fuel on the stock exchange continued to fall for the third day in a row. AI-92 gasoline in the European part of Russia fell in price at the end of trading on September 21 by 5.7%, to 61.9 thousand rubles. per ton (since September 18, when rumors about the introduction of a duty appeared – by 12.2%), AI-95 gasoline has lost almost 4% in price, to 66.5 thousand rubles. per ton (from the beginning of the week a drop of 12%). Diesel fuel quotes fell by 2.1% to RUB 71.9 thousand. per ton (by 4.2% relative to the peak of 75 thousand rubles, reached on September 19).

The introduced export ban (its volume is estimated at 900 thousand barrels per day for diesel and 60–100 thousand barrels for gasoline) is the most stringent possible regulatory measure. It is expected that it will give the government time to prepare more systemic solutions in the form of a protective export duty. Wherein, as sources told Kommersant, the duty may be non-standard – the state is going to return it to “bona fide exporters,” that is, those companies that comply with the recommendations of the Ministry of Energy for supplies to the domestic market. Its exact size has not yet been determined: a wide range is being discussed – from $50 to $500 per ton.

The head of the Russian Fuel Union, Evgeny Arkusha, believes that the temporary ban was adopted in order to immediately saturate the market and stimulate all interested parties to “accelerate the adoption of regulatory documents that will ensure the normal functioning of the domestic petroleum products market in the future.” The mechanism will be discussed with the heads of oil companies and interested departments on September 22 at a meeting with Deputy Prime Minister Alexander Novak. Mr. Arkusha doubts that a complete export ban will be introduced for a long time. “Even a month is a lot. Most likely, the days are counting,” he says, noting that otherwise the refinery will have to reduce processing, since the production of diesel fuel at full capacity of the refinery significantly exceeds the volume of its demand on the Russian market.

Finam notes that a reduction in supplies from Russia could trigger an increase in diesel fuel prices on world markets due to a lack of refining capacity there. They also believe that Surgutneftegaz will suffer the most from the ban on gasoline exports, while Tatneft and Gazprom Neft will suffer the most from diesel fuel. The largest Russian oil companies do not comment on the situation.

Olga Mordyushenko