Gas prices have stabilized, but diesel fuel has started to rise. Should we expect a lull at gas stations by the end of the year?

However, calmness is likely an illusion. During the same week, the price of diesel fuel (DT) increased by 51 kopecks, and over the last four weeks, it has risen by 1 ruble and 47 kopecks (1.7%). Since the beginning of the year, DT prices have gone up by 6.1%, exceeding the consumer inflation rate for the same period (5.23%). Gasoline took a similar path earlier, with the average price increase by November 5 exceeding inflation by more than double (12.1%).

By the end of this year, gasoline may set a record for price increases since 2019, the year when a damping mechanism was introduced (subsidies for oil companies for supplying fuel to the domestic market). At that time, the government made a "gentlemen’s agreement" with oil companies, stipulating that gas station prices should not rise above the annual consumer inflation rate.

Gasoline prices already exceeded the annual consumer inflation rate by 1.6% last year, and they are expected to exceed it again this year. Since 2019, the government has made multiple adjustments to the parameters of the damping mechanism, always leaning towards reducing payments to oil companies. This year, amidst the peak of the gasoline crisis, a decision was made to temporarily prohibit adjustments to damping payments (when exceeding threshold prices on the exchange), which was a gesture towards the industry. It is likely that this decision, combined with a seasonal decrease in demand, influenced the market, leading to a halt in the growth of gasoline exchange prices, followed by a stop in rising prices at gas stations.

Now, regarding gasoline, two main questions arise that are likely on everyone’s mind: How long will this market calm last, and could retail gasoline prices drop by the end of the year? For diesel, there are also two main questions of interest: How long will its price continue to rise, and by how much?

The halt in retail gasoline price growth followed a decline from historical highs in its exchange quotes. Grade A-92 saw a wholesaler price decrease of 16.5%, while A-95 dropped by 8.3%. Yet at the peak of price increases, the rise in these quotes since the beginning of the year was substantial, with an increase of 43.7% for A-92 and 49.6% for A-95. Thus, the relative reduction in quotes was not significant.

According to Yuri Stankevich, Deputy Chairman of the State Duma Energy Committee, the volatility of exchange gasoline prices makes 2025 unique compared to previous years. The reason for this volatility is the force majeure circumstances of the second half of the year (stoppages at oil refineries due to drone strikes). The decline in exchange prices will primarily affect the financial situation of independent gas stations (not owned by large oil companies, which constitute about half of gas stations in Russia). Retail prices at these stations differ from vertically integrated oil companies (VIOC, which handle the entire production cycle from oil extraction and refining to selling finished fuel at retail) by 10-20 rubles. A decrease can be logically expected in this segment, as emphasized by Stankevich, in line with demands from Russia’s Federal Antimonopoly Service.

As noted by analyst Sergey Kaufman from Finam, some price reduction possibilities exist at independent gas stations as their margins shift into positive territory. However, significant reductions are not expected at VIOC gas stations. Although the situation in the wholesale market has eased, it remains difficult. Additionally, since July, the margins for gas stations selling gasoline have been in the negative zone, meaning they might be forced to maintain higher prices to compensate for previous losses, the expert clarifies.

Dmitry Gusev, Deputy Chairman of the “Reliable Partner” Association's Supervisory Board and a member of the expert council for the “Gas Stations of Russia” competition, believes retail gasoline prices will not significantly drop as they are already at their minimum possible levels. As long as fuel prices are aligned with inflation, we should not expect decreases; their growth appears to be programmed. Alternatively, we may need to wait for overall deflation in the country, which is a question for the Central Bank.

From the perspective of Mark Shumilov, an analyst in the resource sectors at Renaissance Capital, the main driver for normalizing gasoline prices is the restoration of fuel output at refineries post-repairs. Following this, gasoline prices at gas stations could stabilize at more comfortable levels.

The situation with diesel is slightly different. According to Kaufman, the transition to winter diesel in Russia is traditionally challenging, which leads to pronounced seasonality in DT prices. Currently, seasonal factors are compounded by reduced processing volumes due to attacks on refineries. The expert suggests that price pressures on diesel could remain elevated for another 2-2.5 months, with a projected increase in diesel prices by the end of the year ranging from 8.5% to 9.5%.

However, it can be argued that the attacks on refineries primarily impact gasoline production, which in Russia has historically been produced at levels 12-15% above domestic market demand. Diesel output nearly doubles domestic demand, and even under the most pessimistic estimates from Western information agencies, no more than 30% of our refining capacities have been affected by drone strikes. Diesel exports to non-producers (traders) are temporarily banned, meaning that there is currently more diesel being produced than is needed for the domestic market. Typically, diesel prices slow their growth or even stabilize by early December.