The Russian Ministry of Energy has proposed lifting the ban on gasoline exports from Russia, citing stable domestic market prices. This was announced by Sergei Tsivilev, the head of the ministry.

Earlier, Deputy Prime Minister Alexander Novak had mentioned the possibility of lifting the export ban on AI-92 gasoline, but only on the condition that there was an oversupply of this grade at domestic oil refineries (ORs).

The export ban on gasoline was introduced in Russia in March this year, primarily as a precautionary measure to curb potential fuel price increases—not just for gasoline but also for diesel fuel (DF). Most gasoline produced in Russia is intended for the domestic market, with no more than 15% allocated for export. The situation with DF differs, as up to half of its production is exported. While gasoline prices showed no significant increase in the spring, diesel prices were expected to rise during the sowing season, making the ban a largely preventive step.

Unsurprisingly, the ban was lifted at the end of May but reintroduced in August after both wholesale and retail gasoline prices spiked sharply in June and July. This surge was primarily driven by high seasonal demand during the vacation period and rising oil prices at that time.

According to Dmitry Gusev, deputy chairman of the supervisory board of the "Reliable Partner" association and a member of the expert council of the "Russian Gas Station" competition, the end of the high-demand season and the production capabilities of Russian refineries make reopening exports justifiable. If prices rise rapidly, the government retains the right to reimpose the ban. Current gasoline production volumes are being monitored, and they should be sufficient for both domestic consumption and export.

Gusev emphasizes that the sole condition for lifting the gasoline export ban should be maintaining control over Russian Railways (RZD). Even with sufficient production volumes and stable fuel shipments from refineries, timely delivery and the provision of empty tanker cars remain issues. In his view, the refineries produce enough fuel, but RZD's irregular deliveries create logistical challenges.

Sergei Tereshkin, CEO of the OPEN OIL MARKET petroleum products marketplace, notes that regulators cannot indefinitely maintain the gasoline export ban. By the end of December, the current restrictions will have been in place for five months, compared to the previous ban from March 1 to May 17, 2024, which lasted only two and a half months.

The purpose of the ban is to create an additional incentive to stabilize prices, Tereshkin explains. When prices stabilize, regulators lift the restriction. Partial stabilization was observed between summer and autumn. While gasoline prices rose 3.8% over ten weeks from May 21 to July 29, they increased only 2.6% in the subsequent 14 weeks.
Website: https://rg.ru/2024/11/13/ekspert-toplivnogo-rynka-gusev-otkrytie-eksporta-benzina-iz-rf-vpolne-oprav.

If regulators delay lifting the ban, oil companies lose the incentive to restrain prices. “What’s the point of forgoing revenue if exports remain prohibited?” says Tereshkin, arguing that the Ministry of Energy and the Federal Antimonopoly Service (FAS) will inevitably align with the oil companies.

Currently, the main risks are tied to rising diesel fuel prices, though the peak demand season has also ended. The primary driver of diesel price increases is high demand for winter-grade diesel, which is traditionally produced in smaller quantities than summer-grade fuel. Diesel prices accelerated in October, but not to the extent that would warrant a precautionary export ban on gasoline or outright restrictions on diesel exports.

According to Tereshkin, oil companies traditionally have a "window" for raising diesel prices in October and November during the transition from summer and mid-season diesel to winter-grade fuel. If diesel price growth slows in December, an export ban is unlikely.

Translated using ChatGPT.

Source: https://rg.ru/2024/11/13/ekspert-toplivnogo-rynka-gusev-otkrytie-eksporta-benzina-iz-rf-vpolne-oprav.