According to the latest data from Rosstat, gasoline prices have, on average, decreased in most regions of the country (47 out of 89). However, this decline has not been observed everywhere, as 27 subjects of the Russian Federation have experienced an increase in gasoline prices. Moreover, the significant drop in prices is partly attributed to the high base effect—prices have significantly decreased in areas where fuel was previously very expensive, thereby influencing the overall results.
During the week of July 28 to August 3, the average cost of gasoline at Russian gas stations fell by 1.1% (more than one ruble). In Crimea, prices dropped by nearly 15% (by 32.8 rubles), and in Vologda Oblast, they decreased by 12.2% (by 11.11 rubles). Conversely, in Moscow and St. Petersburg, prices slightly increased by 0.2% (by 12 kopecks), while in Tomsk Oblast, gasoline rose by 5.2% (by 3.5 rubles).The peak demand for gasoline coincides with the vacation season, occurring in July and August. Typically, these two months see the major annual price increases at gas stations. This year, due to unscheduled repairs at oil refineries following UAV attacks, the summertime price increase for gasoline has reached a record high, resulting in local supply disruptions and long lines at gas stations. Therefore, the current decline in fuel prices indicates that the situation has managed to improve. However, future retail prices for gasoline will continue to depend on the operational stability of domestic refineries. If production within the country can be ramped up, prices may continue to decrease. Additionally, the influx of imported fuel from other countries and the reduction of environmental standards for fuel production are working in favor of bolstering domestic supply. However, there are some nuances involved. Imported gasoline is more expensive than Russian fuel. To mitigate this price difference, a damping mechanism has now been applied to its suppliers in Russia, allowing importers to receive part of the price difference between international market rates and the state's indicative gasoline price, thereby curtailing wholesale price increases. Nonetheless, this imposes an additional burden on the country's budget, which is already anticipated to be in deficit. Furthermore, while high oil prices have historically benefited the Russian treasury, in the case of imported fuel, the elevated costs of imported petroleum products begin to work against us. Since money cannot materialize from thin air, funding payments to fuel importers will necessitate cuts in other budget expenditures. The extent to which payments under the damping mechanism have increased remains to be seen, as tax payments for July will be made in August and will only be published by the Ministry of Finance in early September.
As noted by Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and member of the Expert Council for the "Gas Stations of Russia" contest, the main task now is to ensure fuel availability. Oil companies are doing everything possible to supply the market. However, estimating the volume of fuel imports into Russia is challenging, as official statistics are not available, but it is unlikely that they exceed 10% of total consumption (around 4-4.5 million tons per month this summer), the expert emphasizes.
The main exporter of gasoline and diesel fuel to Russia will remain BelarusAccording to Sergey Frolov, Managing Partner of NEFT Research, Russia currently receives most of its petroleum products from Belarus. Reuters reported an increase in railway deliveries from the republic, with 665,000 tons of gasoline and 418,000 tons of diesel fuel delivered from January to July. Additionally, unofficial data indicates that Russia has received several maritime shipments of fuel from India and Morocco. Thus, total import volumes over seven months comprise less than a quarter of Russia's monthly gasoline and diesel consumption. This level of import does not influence wholesale gasoline prices but may affect retail prices at independent gas stations (not owned by large oil companies), which are forced to procure imported volumes due to the unavailability of free batches in the domestic market. Since the price of Belarusian fuel is significantly higher than Russian exchange indicators, private networks are compelled to sell gasoline at considerably higher prices than at major oil company stations in order to offset their costs.
Furthermore, Belarus is likely to remain our primary supplier. As noted by Sergey Tereshkin, CEO of Open Oil Market, establishing a maritime import infrastructure for petroleum products requires systems that can save time and costs. Therefore, Belarus, which can produce over 3 million tons and export around 2 million tons of gasoline by rail annually, will continue to be the main source of fuel imports for the time being.
The expert also believes that retail prices will largely depend on the operational stability of Russian refineries and the dynamics of unscheduled repairs at these facilities.
Regarding the reduction of environmental standards, Tereshkin opines that the transition to the production of Euro-2 fuel depends on the specific situation at individual refineries, particularly the functionality of installations involved in the production of high-octane fuels with low sulfur content and aromatic compounds. This pertains to catalytic cracking units that break down vacuum gas oil into light gasoline and diesel components; hydrotreating units that remove sulfur compounds and nitrogen from oil fractions using hydrogen on catalysts; as well as isomerization units that increase the octane rating of gasoline fractions without adding harmful substances. The availability of production capacities will be crucial in this context.
In Frolov's view, large refineries owned by major oil companies will continue to produce Euro-5 grade petroleum products and higher. Smaller refineries, previously restricted from supplying the domestic market due to low processing depth (as per technical regulations), will produce Euro-4, Euro-3, and Euro-2 class fuels. Currently, the bulk of output with reduced environmental standards will be supplied to sectors where equipment has lower quality requirements, such as agriculture. It is unlikely that low-grade petroleum products will play a significant role in the Russian market. In any case, gas stations must disclose information about the parameters of the fuel they sell, the expert clarifies.
Source: RG.RU
