Wholesale gasoline prices hit a new all-time high

The price of AI-92 gasoline on the SPIMEX exchange on June 14 reached 57,917 rubles per ton, which became a new historical maximum. The previous maximum was recorded in September 2021 – 57,515 rubles / t. As a result of trading on June 14, the price of AI-92 amounted to 57,899 rubles / ton, compared with the closing price on June 13, gasoline rose by 2.2%.

The price of AI-95 also reached a historic high of 66,722 RUB/t (+2%). Diesel fuel quotes are more stable: on June 14, 1 ton cost 51,342 rubles. (+0.87%) is far from the record of 58,151 RUB/t (September 2022).

Growth in wholesale prices for gasoline has been observed since mid-April, despite the growth in production in Russia. In January-April 2023, the volume of oil refining increased year-on-year by 3.2% to 93.76 million tons (Vedomosti wrote about this on May 26). On June 14, Energy Minister Nikolai Shulginov said that refining had increased by about 4.6% since the beginning of the year. He also noted that the implementation of government instructions to stimulate the output of light oil products, modernize refineries, and increase fuel production “is going according to plan” (quoted by RIA Novosti).

Against the backdrop of rising wholesale prices, on May 24, the head of the FAS, Maxim Shaskolsky, said that the agency was ready to support the restriction of gasoline supplies for export. “The Ministry of Energy is responsible for the work of oil companies, if there is an initiative from them, we will support it,” he said.

Shulginov said the same day that the Ministry of Energy was ready, if necessary, to come up with a proposal to limit the export of gasoline and diesel fuel. He explained that the ministry advises oil companies to “increase supply and reduce exports.” A Vedomosti source familiar with the discussion then explained that the Ministry of Energy recommended to stabilize the situation on the fuel market to reduce the export of diesel fuel, suspend the supply of gasoline abroad and increase the mandatory minimum for the sale of gasoline at SPIMEX.

A FAS spokesman told Vedomosti on June 14 that the agency had sent a request to nine oil companies to increase sales of gasoline on the stock exchange. According to the FAS, the decrease in sales from January to May 2023 amounted to 7.9%, and there was an unsatisfied demand for AI-92 and AI-95 in the domestic market. In this regard, there is a significant change in wholesale prices, explains the representative of the FAS.

“In the absence of action, the service may consider such actions as signs of a violation of the law on the protection of competition and initiate antitrust cases,” the source said.

He added that the Federal Antimonopoly Service is working on raising the standard for sales on the stock exchange for petroleum products. The Federal Antimonopoly Service previously suggested increasing the standard for gasoline to 15% of production (now it is 12%).

Ensuring the supply of motor fuel to the domestic market is an unconditional priority for Rosneft, a spokesman for the oil company said. The company is the largest supplier of fuel to the stock exchange and traditionally exceeds stock standards, the source explained. According to him, in June the volume of gasoline deliveries exceeded the established figures by 195%. Rosneft supplies almost all the produced volumes of Euro-5 gasoline to the domestic market, ensures the stable operation of its own filling station network (the largest in Russia), says its representative.

Vedomosti sent questions to the Ministry of Energy and oil companies.

Analyst FG “Finam” Sergey Kaufman notes that pressure on prices is exerted by the expectation of a decrease in damper payments, the weakening of the ruble against the dollar (the Central Bank’s dollar exchange rate on June 15 rose by 0.68% to 84.32 rubles – Vedomosti) and the season of high fuel demand. In his opinion, adjusting the damper is one of the main reasons why it may be less profitable for oil companies to send fuel to the domestic market.

The damper is designed to contain the rise in fuel prices in Russia. He assumes that at higher export prices compared to the domestic market, refineries receive payments from the budget. In the reverse situation, the oilmen must pay extra to the budget. Last year, refineries received record damper payments of RUB 2.2 trillion, which is 3.2 times more than in 2021. In May 2023, companies were paid RUB 103.5 billion.

At the end of April, Finance Minister Anton Siluanov announced a proposal to halve damper payments from July 2023 to July 2024. According to the Ministry of Finance, the budget will save up to 30 billion rubles. per month. The adjustment should not lead to an uncontrolled increase in fuel prices on the domestic market, Siluanov noted. The Ministry of Finance plans to submit the bill to the State Duma in June. Shulginov said in early June that damper adjustment parameters are still being discussed.

Retail prices are stable. Shulginov said in May that filling station gross margins “remain at a high level.” According to Rosstat, the average price of gasoline of all grades for the week from May 29 to June 5 (latest data) increased by 16 kopecks, or 0.3%. Since the beginning of 2023, the price has increased by 1.5% to RUB 51.58/l.

Margins for independent filling stations are already “close to zero,” Kaufman said, leading retail prices to rise slightly. Pavel Bazhenov, President of the Independent Fuel Union (which unites independent filling station chains), previously told Vedomosti that the price level on the stock exchange, which is uncomfortable for independent filling stations, is 58,000–60,000 rubles/t for AI-92 and 63,000–65,000 for AI- 95.

Ekaterina Krylova, managing expert of the PSB Analytics and Expertise Center, also notes that the growth in exchange prices began to affect retail. According to her, the increase in prices at gas stations can reach 5%. Krylova believes that due to the decrease in exports and the gradual end of the refinery repair season, the increase in wholesale prices is “in the final stage.” She believes that, most likely, regulators will need to intervene in the situation. Kaufman notes that while the proposals of the Ministry of Energy to reduce exports and increase sales on the stock exchange are advisory in nature. “If this is not enough, we can expect restrictions on the export of gasoline or an increase in standards for the sale of fuel on the exchange,” he says.