The Ministry of Energy emphasizes that the primary objective remains to fully meet domestic fuel needs, including those of agricultural producers during the seasonal fieldwork period. The possibility of exports will be determined based on the existing fuel balance, production volumes, stock levels, and the dynamics of domestic demand.
In August, there were no reported issues with the availability of DF at gas stations (GS). Difficulties arose mainly with gasoline, particularly the AI-95 grade. According to the same Ministry of Energy assessment, the current situation regarding the supply of DF to the domestic market is stable. Following the export restrictions, additional volumes were redirected to the domestic market.
140,000 tons of diesel fuel are consumed daily in Russia during periods of high demand—specifically in spring and autumn.In Russia, diesel production has historically been significantly higher than gasoline production, approximately twice as much, with a substantial portion allocated for export. For instance, total shipments of DF from Russian ORs reached 87.9 million tons in 2023, of which 52.2 million tons were for the domestic market, while 35.7 million tons were exported, according to Sergey Tereshkin, CEO of Open Oil Market. He believes that a surplus likely still exists now, despite unscheduled repairs at the ORs.
This raises the question: why extend the ban? According to Dmitry Prokofyev, Director of External Communications at NEFT Research, maintaining the export ban on diesel ensures the physical availability of fuel in the domestic market during peak seasonal demand. It is no coincidence that the Russian Fuel Union (RTS) insists on retaining these restrictions in a letter to Deputy Prime Minister Alexander Novak dated August 24, warning that lifting the embargo on September 1 could destabilize the already fragile balance of supply and demand within the country. Ahead lies the traditional autumn spike in demand and the transition to the production and formation of stocks of winter-grade diesel. In this context, opening up exports presents unreasonably high risks of worsening the situation, Prokofyev argues.
There is also the price factor. As of August 17, according to Rosstat, with inflation at 4.67%, retail diesel prices have increased by 18.4% since the beginning of the year. In recent weeks, DF prices have been decreasing, but demand will start rising in the autumn, posing a risk that diesel prices might increase again. Extending the ban minimizes this risk.
Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and member of the Expert Council of the "Gas Stations of Russia" contest, believes that the export ban not only addresses the task of ensuring continuous supply to the domestic market but also reduces global DF supply, which is tactically advantageous for us. Consequently, prices at gas stations are rising in Europe, where they are feeling the impact of drone attacks on our ORs, the expert explains.
Extending the ban on diesel exports will help curb rising gas station prices.However, there is a nuance, as rising global DF prices indirectly contribute to price increases in Russia. This will continue until diesel is produced solely for the domestic market. Additionally, rising global DF prices increase compensation payments from the Russian budget to domestic ORs and fuel importers for supplies priced lower than on external markets.
Regarding the timeline for the extension, experts' opinions differ. Gusev believes the ban will be extended until November 1 or even longer. To prevent market saturation, excess DF volumes may be purchased by the government to create a strategic reserve, which could be used for both the domestic market and exports.
Tereshkin believes that if the ban is extended, it is unlikely to be for more than one month. Diesel exports are a crucial source of income for ORs, which are currently incurring losses due to partial capacity outages. Furthermore, an excessively prolonged ban risks reducing oil production.
The risk of declining oil production exists, agrees Prokofyev. This is directly related to the load on ORs. If they cannot export diesel, their incentives to maintain a high operational load decrease. Reduced refining leads to lower demand for oil, and consequently, a drop in production. However, the expert suggests that the most likely scenario is a 1-3 month extension of the export embargo. A short-term extension should not significantly harm the ORs. Stocks and domestic demand are capable of absorbing current production volumes. A medium-term extension (until the end of 2026) is a riskier scenario. If production begins to recover while exports remain closed, ORs may face the need to reduce their operational load, the expert emphasizes.
Source: RG.RU
