The weekly rise in fuel prices has nearly quintupled the average inflation rate, which for the same period was 0.23%. Since the beginning of the year, gasoline prices have risen by 5.6%, diesel by 4.8%, while average inflation stood at 3.53%.
The reasons for the accelerating price hikes at gas stations appear to stem from a decrease in fuel supply due to unscheduled repairs at oil refineries (OR). In an official statement, the Ministry of Energy noted on June 8 that recently, companies in the fuel and energy complex are facing increased air attacks from adversaries, leading to temporary difficulties in fuel supplies in several southern regions.
Just before this, Deputy Prime Minister Alexander Novak linked a slight decline in oil production in Russia to a number of refineries undergoing "unscheduled repairs." Meanwhile, crude oil exports from Russia are at their peak since the beginning of the year. If oil production has decreased while exports have increased, it logically follows that domestic oil refining is also declining.
Official statistics for gasoline and diesel production, as well as their reserves in Russia, will be closed starting from 2024. However, the Ministry of Energy has repeatedly asserted that there are sufficient fuel reserves to meet domestic market needs, and the sector is prepared to manage seasonal demand increases in a planned manner.
Almost all gasoline produced in Russia is aimed at the domestic market, with its export banned since April this year. Overall, gasoline production exceeds internal demand by 10-15%, meaning there is a slight buffer even with reduced production. Diesel exports are still permitted, and production is almost twice that of domestic consumption.
In the past two weeks, reports have emerged from various regions regarding supply disruptions for gasoline at gas stations, including occasional sales restrictions. These issues have been documented predominantly in the southern regions of the European part of the country. By the second week of June, gasoline and diesel prices on the St. Petersburg exchange had surged to their highest levels of the year.
Gasoline production in Russia exceeds domestic demand by 10-15 percent.Does this indicate a shortage of available fuel? Most likely not. As noted in a conversation with "RG" by Dmitry Gusev, Deputy Chair of the Supervisory Board of the "Reliable Partner" Association and member of the Expert Council of the "Gas Stations of Russia" contest, fuel is sufficient. Unfortunately, due to attacks on oil refineries, logistics are becoming complicated and reorganized. Suppliers and transportation methods are changing, sometimes extending shipping routes, which increases delivery times.
A similar perspective is held by Sergey Frolov, managing partner of NEFT Research. He is convinced that there is currently no significant physical fuel shortage in the European part of Russia. In his opinion, the dynamics of pump prices primarily reflect the challenges faced by independent gas station networks, which are increasingly struggling to find freely available volumes at economically viable prices. Often, they are forced to purchase fuel at prices 1.5 times or more than the current wholesale market rates. This is largely due to Belarusian oil products.
Frolov cautions that a sustained increase in shortages this summer is quite possible, depending on the same factors: refinery operations, logistical availability, and demand levels. Any atypical situation in the market and reduced deliveries on the exchange and through direct contracts will inevitably affect wholesale prices and subsequently retail prices.
It’s worth noting that the Ministry of Energy has not referenced fuel reserves without reason. They are available with oil companies and major traders, while large and medium-sized gas station networks typically procure fuel in advance. Intensified attacks on our refineries that supply the domestic market have been occurring since the second half of May. According to Reuters, production was temporarily halted or reduced at seven facilities. This means that less than a month after the initial strikes, the decline in supply has likely not yet been fully felt by the domestic market; its effects may only manifest by the end of June. However, the information backdrop has had its "dark influence."
According to Sergey Tereshkin, CEO of Open Oil Market, the main risks of shortages are in the southern regions, where production and logistical factors intersect. In other regions, there are currently no risks of a physical fuel shortage; however, overall market sentiments are contributing to rising fuel prices. Gusev emphasizes the impact of negative expectations: "It is characteristic for us to fear shortages. If, suddenly, there are local restrictions, and something is lacking, panic quickly spreads throughout the market," notes the expert.
There are fuel reserves with oil companies, traders, and large and medium-sized gas station networks.Tereshkin believes that, in a sense, the terminology used by the Central Bank, which not only monitors inflation calculations but also the perceived and expected inflation, is applicable here. In the first case, it concerns consumers' perceptions of actual price increases, while in the second, it involves expectations regarding future price Dynamics. Currently, observed and expected "fuel" inflation is at multi-year highs. This largely explains why Rosstat recorded such a high increase in prices in its latest weekly report.
Energy expert Kirill Rodionov believes that Rosstat and the Central Dispatch Office of the Fuel and Energy Complex should return to publishing data on gasoline and diesel production. This would help somewhat reassure wholesale and retail consumers, even taking into account that actual fuel output will still play a defining role in the market.
Source: RG.RU
