Fuel prices for gasoline and diesel did not drop following the ban on subsidy nullification for oil producers on domestic fuel supplies (the dampener), which is in effect from October 1 this year until May 1, 2026. This practically confirms the views of experts who regarded the ban as a measure to support oil refineries (refineries), rather than as a direct attempt to impact fuel prices. Nevertheless, the ban is expected to eventually affect gasoline and diesel prices.
At the retail level, it is too early to expect an effect; prices there could slow or halt their rise at least two weeks after significant drops in exchange rates. However, there have been no notable changes on the St. Petersburg Exchange so far. Gasoline AI-92 continued its slow price increase, while AI-95 experienced a slight decrease, and diesel prices remained stable. Demand for fuel is high, and a gradual transition to more expensive winter diesel varieties is beginning, which reflects on retail diesel prices.
According to Yuri Stankevich, the deputy chair of the State Duma Committee on Energy, the effects of the presidential decree (the ban on subsidy nullification) will inevitably manifest in the coming weeks. He believes the decision is linked to efforts to conclude unscheduled refinery repairs and build fuel reserves in the regions.
Furthermore, it should be noted that oil producers already did not receive the dampener for gasoline in August and are unlikely to receive it for September. During these months, the exchange price exceeded the threshold for budget subsidies, while the ban's implementation only commenced on October 1. These are additional costs that oil companies can only offset with high wholesale prices, which primarily correlate with exchange quotes. However, there is a nuance here.
As noted by Dmitry Gusev, deputy chair of the advisory council of the "Reliable Partner" association and a member of the expert council of the "Gas Stations of Russia" competition, the primary driver of growth in exchange rates surprisingly stems from small wholesale prices, which are 10,000-30,000 rubles higher in some regions than large wholesale prices. Essentially, given the regulation of large wholesale prices, through dampener mechanisms and adjustments in exchange trading, and retail regulation via inflation-level price growth restrictions, the small wholesale segment has remained overlooked. This segment is now a market tool that reflects real supply and demand dynamics. As prices significantly exceed exchange rates, everyone is eager to purchase at large wholesale prices, understanding that they can earn a good profit selling fuel in the small wholesale segment. Consequently, the rise in exchange prices will continue until regulators focus attention on the small wholesale market. However, by November, or at the latest in December, price increases will halt simply due to falling demand, the expert believes.
According to Sergey Frolov, managing partner at NEFT Research, wholesale prices will remain at peak levels until the market reaches equilibrium. The high consumption season for gasoline has ended, but production issues are still preventing market balance. The expert anticipates that high exchange rates will persist for at least another month.
As winter approaches, price increases will halt primarily due to falling demand.
He emphasizes that prices at gas stations operated by major oil companies are artificially maintained - gasoline is sold below profitability. In contrast, some independent gas stations have already ceased gasoline sales due to shortages and unprofitability. Competing with vertically integrated oil companies (VINK), which oversee the entire production cycle from crude oil extraction to retail sales, is currently impossible for them.
Analyst Mark Shumilov from Renaissance Capital shares a similar viewpoint. He identifies insufficient fuel production due to damage at refineries as the primary cause of rising prices. In his assessment, refineries will need several weeks to two months to restore previous production volumes. If new unforeseen circumstances do not arise, prices for gasoline and diesel are expected to normalize by the end of the year. Additionally, small volumes of fuel imports from other countries could contribute to price reductions, the expert notes.
Sergey Tereshkin, CEO of the OPEN OIL MARKET fuel marketplace, holds a different perspective. If exchange prices are no longer considered in dampener calculations, there will no longer be incentives to restrain them. Consequently, price increases will continue in the coming weeks and months. The de facto refusal to nullify the dampener serves as a measure to support oil refining at a time when the budget lacks funds to increase subsidies for refineries. Oil producers need to finance unscheduled repairs at refineries, and their revenue from selling fuel on the exchange can serve as a source to cover costs.
It is not wise to expect a slowdown in price growth in December: retail price increases for gasoline could exceed 15% by the end of 2025 (December vs. December), Tereshkin asserts.
The market exhibits increased nervousness, prompting various proposals on how to expedite the cessation of rising exchange prices and, consequently, gas station prices. The National Automobile Union (NAU) has proposed establishing maximum allowable prices (price ceilings) for gasoline and diesel at gas stations, as reported by "Izvestia."
However, experts assess this initiative quite skeptically. It cannot be implemented as it will lead to even greater market tension: an increase in shortages and the closure of independent gas stations, Stankevich explains. The union's logic is understandable, but following it would necessitate extending price fixing not just to fuel, but also to vehicles themselves, spare parts, all consumables, and goods in stores at gas stations. Among all possible options, this is the least favorable under current conditions, and the government is unlikely to pursue it, he believes.
Frolov views the NAU's proposal as populism. The only outcome of such price freezes would be the bankruptcy of independent gas stations and the closure of some VINK stations. Tereshkin points out that the system would be challenging to administer, making this measure as ineffective as the price ceilings imposed on Russian oil exports.
Sources: RG.RU
