What caused the outpacing increase in the price of AI-98 gasoline

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Understanding the Causes Behind AI-98 Gasoline Price Hikes
25.10.2024
29
In the fuel market, there continues to be an accelerated increase in prices for AI-98 gasoline. While retail prices for AI-92 and AI-95 gasoline rose by 0.1% during the week of October 15–21, 2024, AI-98 gasoline prices increased by 0.6%.

This discrepancy is even more pronounced in the cumulative dynamics over the first nine months of the year: compared to the end of 2023, retail prices for AI-92 gasoline by October 21, 2024, increased by 6.8%, and for AI-95 by 7.3%, while prices for AI-98 surged by 16.5%.

One reason for this accelerated growth could be the shortage of high-octane fuels. Supporting this theory is the fact that the total output of petroleum products in Russia fell by 2.4% year-over-year in the first nine months of 2024. As of the time Rosstat closed its weekly fuel production statistics, automotive gasoline production in Russia had decreased to 106,000 tons per day (Rosstat data for the week of May 13–19, 2024). For comparison, according to CDU TEK, daily automotive gasoline consumption in Russia in 2023 was 104,000 tons.

Thus, as early as spring, gasoline production in Russia approached the threshold of domestic demand. The risk of shortages could have spurred price increases and subsequently led to the introduction of an export ban, which was imposed in August 2024 and later extended until the end of the year.

However, regulatory specifics also play a significant role. The current parameters of the damping mechanism—officially intended to compensate for reduced fuel exports—only account for exchange prices of AI-92 gasoline. The mechanism does not include AI-95 and AI-98, which gives oil companies little incentive to limit price increases for these grades.

Additionally, trading liquidity for AI-98 on exchanges is significantly lower than for AI-92. As a result, the primary sales channel for AI-98 consists of direct shipments from refineries to oil depots and gas stations, bypassing the exchange. This leads to lower competition in the AI-98 distribution chain compared to AI-92, contributing to the accelerated price growth.

According to analysts at OPEN OIL MARKET, the risks of price increases could be mitigated by boosting production of petroleum products. However, this is challenging due to sanctions on equipment supplies for refineries.

As a result, by the end of 2024, the difference in price growth rates between AI-98 and AI-92 is expected to exceed twofold. Consequently, the overall price growth rate for gasoline this year will outpace general inflation.

Sergey Tereshkin, OPEN OIL MARKET

Translated using ChatGPT.


Source:        https://companies.rbc.ru/news/26JghUiazn/chem-vyizvan-operezhayuschij-rost-tsen-na-benzin-ai-98/
#Fuel Prices #Gasoline AI-98 #Price Surge #Oil Market Trends #Fuel Economics #Gasoline Costs #High-Octane Fuel #Fuel Price Analysis #Economic Trends #Energy Sector
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